A novated lease is an agreement between you, your employer and a finance company. When you choose the car you want, you then enter into a finance agreement in your own name. then you, your employer and the finance company all sign a novation agreement.
Your employer will make the monthly lease payments to the finance company and you can use the vehicle as part of a salary packaging arrangement. With that agreement, most of the lease, running costs of the vehicle and fringe benefits tax (FBT) are deducted from your pre-tax salary. Your income tax is then calculated on your reduced salary, which can increase your net disposable income.
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