GoNovated Comprehensive Guide

When it comes to getting a new car, you may find yourself considering one of these options: 1) Spending your savings 2) Taking out a loan from the bank 3) Drawing down from your mortgage However, there is one more option that could change the way you look at things: Novated leases. This is arguably the easiest and most practical way to get the car you are looking for. Thousands of Australians are already enjoying the benefits! For you to know everything you need to know before you make a decision, here is a summary of all the key points about Novated leases:

How do Novated leases work?

The main thing to keep in mind is that these leases are arrangements between an employee, an employer, and a financier. These arrangements can vary in length (generally from 1 to 5 years).

Also, it is important to know that unlike other leases and other forms of financing, Novated leases allow you to pay for the car from pre-tax wages.

What are the benefits of this special feature?

1) Goods and Services Tax savings on the purchase price of the car.
2) Savings on running costs
3) Spreading out the payment of the car costs instead of paying large amounts upfront.

But best of all, there are many suppliers and many incredible deals out there, where you can find the latest models in the best condition, both new and used.
And as if that wasn’t enough, there is the possibility to switch your model for a newer one while still paying the lease.

Tax Savings:

As mentioned above, Novated leases allow the employee to pay for the car out of their pre-tax salary.

Through an arrangement between the employee, the employer, and the financier, this amount can be deducted directly by the payroll department.

Thanks to this, the employee avoids paying income tax on this amount, saving a good amount of money.

Post-Tax Payments:

The ATO considers leases to be a benefit outside the normal cash salary.

For this reason, leases are subject to FBT (Fringe Benefits Tax).

In the face of the obligation to pay FBT, the employee’s deductions can be set to include a portion of his or her post-tax salary.

In this way, through the ECM (Employee Contribution Method), the taxable value of the vehicle can be reduced while covering the entire FBT liability.

Benefits in Terms of Expenses:

With Novated leases, all running and maintenance expenses selected by the employee are covered from amounts set aside from each salary.
Some of these expenses may include:

  • Registration.
  • Maintenance.
  • Insurance.
  • Lease Payments.
  • Fuel.
  • Tires.
  • Servicing.
  • Car washes.

The total value of the running costs is determined before the commencement of the lease.
The total of that value will then be deducted in equal payments from the employee’s wages.

Payment of the vehicle costs will generally be arranged by GoNovated or the employer.
If the employee ends up spending more or less than the pre-established value, the budget can be easily modified.

Reduced Upfront Payments:

One of the best qualities of Novated leases is that employees do not need to pay GST on the purchase price of the new car, which radically reduces upfront costs.

The two most popular types of Novated leases are Self-Managed and Fully-Managed.


The employee must handle the entire process: financing, insurance, negotiations, setting up payroll deductions, budgeting running costs, and coordinating the lease novated with the employer.


GoNovated takes care of the entire process: financing, insurance, negotiations, setting up payroll deductions, budgeting running costs, and coordinating the lease novated with the employer.

At the end of the lease novated contract the employee can:

1) Initiate a new Novated lease to cover the residual amount.
2) pay the residual amount and keep the vehicle.
3) Trade in the vehicle and pay the residual amount from the proceeds.
4) Sell the vehicle, pay the residual amount and keep the difference.

Residual Payment:

The residual payment is the amount that remains unpaid (and the employee is left owing) at the end of the lease term.

This amount is stipulated by the Australian Tax Office according to the specific terms of each lease.