Benefits of Novated Leasing

Many employees in Australia today are taking advantage of novated leases. Novated leases have helped many employees acquire their dream vehicles.While novated leases and novated leasing is very common in Australia. Most of the people are still unaware about novated leasing. Thus to answer the question, What is novated lease? it can be simply stated as follows:

Novated leases are a type of vehicle finance in Australia and a lot of organisations or firms provide this facility to their employees. Novated leasing that involves an arrangement between the employer and the employee where the employee can lease a vehicle on behalf of the employee with the lease payments being made from the employees pre-tax income. The employer will usually make the payments on behalf of the employee by deducting the money from the employees pre-tax income. Novated leases are very popular in Australia because of its good benefits. The main reason for novated lease or novated leasing gaining popularity is the many advantages that it offers. Some of the main advantages of novated leases are as follows:

The novated lease requires the employer to pay the money from the employees pre-tax income. This helps the employee save on income tax as it deducts the employees taxable income thereby reducing the income tax. A novated lease offers numerous options to the employee. The employee has the option to own the car when the term ends or pay out the current lease and opt for a new novated lease for a another car.

Employers too benefit from novated leases as it helps increase employee morale and leads to employee retention. It is also a great benefit in salary packages and a great way to attract new employees.

If the employee leaves the company during the novated lease period, the responsibility for the payment lies with the employee. The lease instantly becomes a two-party agreement when an employee leaves an organisation and the employer is not involved in any way.

Novated lease has different meanings for the employees and employers. For employees, novated leases mean higher savings and for employers' novated leases mean greater productivity. So, we can say it is beneficial to employees as well as employers and thats also a main reason for its popularity. Thus, given the benefits of novated leases, most employers today are enquiring about what is novated lease? and offering novated lease arrangements to their employees.