Novated Leasing for Employers: The Complete Guide
The novated lease can offer huge savings for employees, but best of all, it’s simple for employers to set up with almost no paperwork. And it’ll cost you nothing out of pocket. This page is your cheat sheet to a happier team and becoming an employer of choice.
Why offer novated leasing?
A novated lease offers employees the ability to pay for a car and all running costs out of their pre-tax income. Novated leases appeal to all employers, regardless of size, as they are an easy way to offer employees salary sacrificing on a popular (and high ticket) item.
Unlike standard car loans, which draw from your staff’s post-tax income, novated leases allow your staff to tap into their pre-tax income and reduce the amount of income tax they pay.
There are other benefits too:
- Your staff will avoid paying GST on the car and its running costs.
- Your staff can get access to fleet pricing.
- The alternative – buying a car outright – is waning in popularity, as it involves an extremely high up-front cost on a depreciating asset
You can probably start to see the huge value to employees looking to save costs, especially on their biggest expense (after their home).
Benefits for employers and employees
Whether you’re an SME, ASX-listed company or government body, novated leasing can work for organisations of all shapes and sizes.
Attract and retain talent
Novated leasing can make remuneration packages larger, more comprehensive and more attractive without hitting your bottom line.
Boost your cash flow
Offering novated leasing can lower your overall payroll tax liability, superannuation obligations and WorkCover premiums.
Improve retention
It’s a financial and lifestyle benefit that makes employees feel valued, which can reduce turnover.
Give a pay rise that costs you nothing
A novated lease can save your team thousands in income tax each year, plus GST savings on their car and running costs.
How novated leasing works for employers
Setting up a novated lease is simple, with almost no paperwork.
Onboarding
We'll help set up your profile and preferences with Leaselab.
Employee setup
We provide the pre-tax and post-tax deductions to enter into your payroll system (such as MYOB or Xero).
Payment
Payments can be made by direct debit or EFT on the same date as your pay cycle.
What employers need to know about novated leases
Employer responsibilities and obligations
You aren’t responsible for the leases themselves - your employees are. However, you will be obligated to:
- You need to pay the agreed salary sacrifice amounts in your regular pay cycle.
- You’ll need to account for any FBT liability. However, we’ll be able to guide you here and provide a solution resulting in zero FBT liability.
If you choose us as your novated lease provider and get stuck at any time, you’ll have a dedicated relationship manager that you can contact for fast help.
What does a novated lease cost employers?
Offering novated leases should be cost-neutral for your business. It shouldn’t cost you anything to offer.
Some providers charge management or other fees, so check these before choosing a provider. Small monthly fees add up over the life of a lease and can cancel out a large part of the tax savings.
Over here at Leaselab, we keep our fees low and fully transparent.
How does Fringe Benefits Tax work for employers?
You should seek a novated leasing provider (like us!) that strives for $0 Fringe Benefits Tax (FBT) liability for your company and knows how to offer the most cost-effective FBT solution.
A good provider will:
- Structure leases and actively monitor them to offset any FBT liability you may have.
- Make sure everything is clean, accounted for and managed.
- Provide FBT reporting.
What happens when an employee leaves
The novated lease lives with the employee, so if they leave, they take the novated lease with them and pay it themselves until they find a new employer. You don’t need to transfer the lease to their new employer.
We’ve kept things simple on purpose. Your only obligation is to let us know as soon as possible if anything changes.
The company we keep
Novated leasing is only a benefit if your team has a good experience
We put your team at the centre, because this is meant to be a reward for them. And we’ll spend every single day focusing on how to make their life easier, better and more memorable. That's why we've built the best customer service team in the industry, and the data supports our belief:
83
An NPS score above 70 is considered 'Excellent'
Our phones are answered in under 60 seconds
All emails are responded to within 24 hours
Reimbursements are paid within two business days
Technology built to make leasing easier
Our purpose-built Employer Portal gives your team greater visibility and control over every active lease. From payroll-ready reporting and flexible payment summaries to FBT documentation and employee information, everything is managed securely in one place, helping reduce administration and save valuable time.
Leases
View and manage all employee leases across your organisation.
FBT Reports
Access and download Fringe Benefits Tax reports for compliance and tax purposes.
Invoices
Access payroll invoices and payroll deduction CSV files for your organisation.
Why choose Leaselab?
The LeaseLab Employer Portal shows your whole novated leasing program in one secure dashboard.
Real-time lease visibility
View every active novated lease across your organisation, including employee details, lease status and payment information—all in one place.
Payroll made simple
Generate payroll-ready CSV files that upload directly into your payroll system. Eliminate manual data entry, reduce administration and minimise the risk of errors.
Flexible payment summaries
Payment summaries that work around your payroll. Whether you pay weekly, fortnightly or monthly, access clear, accurate summaries of employee deductions and employer payment obligations for every pay cycle.
Employee overview
Instantly see which employees have active novated leases, making payroll processing, reporting and employee enquiries easier than ever.
Downloadable FBT reports
Access and download Fringe Benefits Tax reports and supporting documentation whenever you need it, helping simplify compliance and end-of-year reporting.
Organisation management
Easily manage your organisation's details, payroll settings and business information, ensuring your records are always accurate and up to date.
Testimonials
Tom Allan
Fulton Hogan
“Leaselab has being providing exceptional novated car leasing services to Fulton Hogan and its employees over the years. This quality service is based on Leaselab’s firm commitment to support our employees throughout the entire process.”
Andrea Bernard
COO, ENGIE ANZ
“Leaselab made the novated lease process straightforward and stress-free. The application was simple, clear and well managed from start to finish. Stuart’s service was outstanding — proactive, responsive and genuinely helpful at every step! I would confidently recommend Leaselab to anyone considering a novated lease.”
Bronte Jelbart
Hickory
“We've been working with LeaseLab for our novated leasing needs and have found them to be prompt, professional, and a pleasure to deal with. Their team communicates clearly and efficiently, making the entire process smooth and straightforward. Highly recommend their services.”
Enjoy Exclusive Offers with RewardLab
Novated leasing is just one part of the reward. Our RewardLab employee benefits app helps your team improve their financial wellbeing, with savings that could add up to $2500 a year in living costs.
Your teams get access to exclusive partner offers, including energy bills, vehicle chargers, solar installation and vehicle upgrades through partners such as Engie and MotorOne.
Start with Leaselab today
Everyone is looking for an edge to lure the best talent. With novated leasing, you can make remuneration packages larger, more comprehensive and more attractive - without hitting your bottom line.
Get in touch or book a demo to see how it could work for your team.
How it works
The novated lease can offer huge savings for employees, but best of all it’s simple for employers to set up with almost no paperwork - and it’ll cost you nothing out of pocket. Remember: Your team will thank you for it.
STEP 1
Onboarding
It’s super simple to set up novated leasing. With us, there’s bare minimum paperwork – you only need to sign a one-page novation agreement (which simply says that you’ll make payments on your employee’s behalf while they’re employed with you) and an invoice confirming the amount you will pay.
STEP 2
Employee setup
For each employee, we’ll provide you with the pre-tax and post-tax deductions to enter in your payroll system (e.g. MYOB, Xero, etc). And then it’s ‘set and forget’, so it doesn’t take more time and energy from your finance team.
STEP 3
Payment options
You can send us payments on your employee’s behalf via direct debit or EFT, and this can be set on the same date the pay cycle happens for simplicity. If you choose direct debit, you only need to sign the usual direct debit terms and conditions. And that’s it.
Then done — you’re ready to roll out novated leasing and one step closer to becoming an employer of choice.
FAQs
As the employer, am I liable for anything in relation to a novated lease?
The finance agreement is signed by the employee, not the employer. There’s no liability to the employer for the finance contract, and the employee retains the liability to pay the lease if they leave. You simply agree to make payments on the employee’s vehicle from their pre-tax income whilst they are employed by you.
What is the financial cost to the company of a novated lease?
With a good novated lease provider, novated leasing is a cost-neutral process for employers. That is, it won’t cost anything to offer. Some providers may include employer management fees, so ensure you check this before selecting a provider.
Is there a fringe benefits tax (FBT) liability for the company?
FBT is a common concern with employer novated leasing. You should seek a provider that strives for $0 fringe benefits tax (FBT) liability for your company and knows how to offer the most cost-effective FBT solution. It’s also important to ensure the provider shares full FBT reporting to demonstrate the $0 liability.
What happens if my employee leaves?
One of the key benefits of novated leasing for employers is that the lease stays with the employee, not the company. If they leave, they take the lease with them and are liable to make payments themselves until they find a new employer. There is no liability to you as the employer, and you won’t be responsible for anything in order to transfer the lease to their new employer.
Will I be locked into a contract with a novated lease provider?
When selecting a novated lease provider, look out for lock-in contracts and additional fees.If flexibility is a concern for you, make sure you find a provider who clearly leaves full control in your hands. Done right, this service should take almost no time and cost you nothing at all.
