Buying a car can be a major expense so any savings you can make are a definite advantage. Including the purchase and running costs of your next car in your salary packaging (this is known as a novated lease), could save you thousands.
What is a novated lease?A novated lease is one of the easiest and most cost-effective ways to buy and run a car. You can enjoy the car of your dreams and combine the finance and running costs (fuel, insurance, rego, etc) in one simple payment each pay day.
*GST is not payable on the purchase price of a vehicle financed through a novated lease (GST saving calculated on the FBT base value of the vehicle, up to the claimable limit [$6,353 in FY2026-27] unless exempt).
Whether you already know the car you want or need help working out the best option for you, the team at our sister company, Smart, can help. They source the car you want from a nationwide network of dealers, using their huge buying power to negotiate their best possible price for you.
They coordinate your salary deductions, pay your finance and running expenses and help with the servicing and insurance too. You can explore your savings or view our latest deals.
Try your dream car without the long‑term commitment. Smart has partnered with Karmo to offer a flexible novated subscription that lets you drive an EV (or petrol car) for as little as four months, with most running costs bundled into one simple salary packaged payment. Cars include Tesla Model Y, Tesla Model 3, Toyota BZ4X or Zeekr X (subject to availability) and more.
Salary packaging a car, also known as a novated lease, is one of the most cost effective and convenient ways to buy and run a car. Watch our video below to learn more.
How does novated leasing work?A new, used or existing car is leased in your name. Instead of making the payments yourself once you have received your regular pay, your lease payment is deducted from your before and after-tax salary before you receive your pay. If you choose an eligible electric vehicle (EV), you can even make all your payment from your pre-tax pay.
Reducing your pre-tax pay will also reduce the amount of income tax you pay. You also save GST on the purchase price of your car and the running costs, which means you could save thousands. You don’t have to be a big earner or drive lots to benefit.
Does a lease affect my other salary packaging benefits?If leasing is part of your salary packaging program, then a novated lease can be packaged in addition to any existing salary packaging benefits.
If you work for a health or charitable organisation you could choose to include your novated lease in your living expenses benefit and make all your payment from your pre-tax pay. Or, you can choose to package your lease in addition to your living expenses and make your payment using a combination of your before and after-tax pay.
The leasing team can provide an obligation-free quote to match your needs and make sure you get a great deal.
Some of the benefits you can include in your salary packaging are classed by the Australian Taxation Office (ATO) as fringe benefits (they are benefits you receive instead of salary). Fringe Benefits Tax (FBT) is charged on these. Salary packaging a car is one of the benefits that attracts FBT.
When you include the purchase of a car in your salary packaging, the first thing you must decide is how you are going to deal with the Fringe Benefits Tax (FBT). Your employer’s salary packaging policy may already specify the method you have to use.
If not, you can choose to include the lease payments in your living expenses benefit (your lease will be referred to as ‘In cap’). There will be no FBT to pay, but this will reduce the amount you can spend on other expenses such as mortgage or rent.
Or you can keep your novated lease as an additional benefit and make part of the payment from your after-tax pay (this is known as the Employee Contribution Method (ECM)).
Ever considered an electric car? There’s never been a better time to lease an Electric Vehicle – they’re now 100% FBT free.
In 2022, the Federal Government introduced the Electric Vehicle Discount. If you purchase an eligible electric vehicle under the luxury car tax threshold, there’s no FBT to pay – which could save you thousands.
Our leasing team can also help you sell your existing car too with their car selling service.
For more information about how our leasing team can help:
Check out the latest deals available on Smart.
See how much you could save.