What is a Partial Novation Arrangement?

There are several options available for employees arranging novated lease vehicles through their employers or sponsoring organisations, including partial novation arrangements in which the vehicle is sub-let back to employers.

Types of partial novation arrangements

These lease agreements may be arranged between the finance company and the employer or between an employer and employee, in which case the employee arranges a separate sub-lease of the vehicle but does not receive payments from their employer for the vehicle’s use. The benefit for the employee lease holder is that they do not have responsibility for payment obligations contained in the original lease. Whichever type of partial novation arrangement you choose, the new lease does not revoke the original lease with the finance company.

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Accounting for GST

Finance companies can claim a GST credit for tax paid on the vehicle purchase when this vehicle is leased or sold through a partial novation arrangement. Employers who sub-let novated lease vehicles from their employees will be eligible to claim GST credits if they make use of the vehicle for business purposes. Employees themselves cannot usually claim GST credits for leased or purchased vehicles, as these are not business expenses.

Novated lease vehicles in Broome

Fleet Network offers salary packaging and salary sacrifice arrangements in Western Australia, including novated leasing in Geraldton, Albany, Broome and Perth. Contact Fleet Network on 08 6555 3854 to find out more about how to salary sacrifice or arrange a partial novation with your employer.