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What is the difference between Salary Packaging and Novated Leasing?

Both salary packaging and novated leasing help reduce taxable income by using pre-tax earnings to pay for expenses, but they apply to differnt type of costs. 

Salary Packaging vs. Novated Leasing

Salary Packaging

  • Covers: Various expenses such as superannuation, rent, laptops, and childcare.
  • Who can use it? Employees in eligible sectors, including government, health, and not-for-profits.
  • Tax benefits: Reduces taxable income for general expenses.
  • Employer involvement: Pays expenses directly or via reimbursement.
  • Fringe Benefits Tax (FBT): May apply depending on the benefit.

Novated Leasing

  • Covers: Vehicle lease payments and running costs.
  • Who can use it? Any salaried employee with employer approval.
  • Tax benefits: Reduces taxable income and includes GST savings on vehicle costs.
  • Employer involvement: Pays the lease on behalf of the employee.
  • Fringe Benefits Tax (FBT): Managed using the Employee Contribution Method (ECM) to reduce FBT to nil.

In short: Salary packaging applies to a wide range of expenses, while novated leasing is a specialised form of salary packaging that applies to car finance and running costs.



Understanding Novated Leasing

What is a Novated Lease?

A novated lease is a way to finance a vehicle using part of your pre-tax salary, reducing your taxable income and saving money. It is a three-way agreement between you, your employer, and a finance provider.

How is a Novated Lease different from a car loan?

  • Novated Lease: Lease payments and running costs (fuel, maintenance, insurance, registration) are paid from your pre-tax salary, leading to tax savings.
  • Car Loan: Monthly repayments are made from your after-tax salary, with no tax benefits.

Who can get a Novated Lease?

  • Permanent full-time or part-time employees
  • Your employer must approve salary packaging arrangements
  • Casual employees may not be eligible

What are the benefits of a Novated Lease?

  • Tax savings: Reduces taxable income and saves on GST
  • Lower vehicle costs: Bundles running costs into pre-tax salary deductions
  • Flexibility: Choose your preferred car (new or used)
  • No minimum kilometres required

What if my employer doesn’t offer salary packaging?

If your employer does not currently offer salary packaging, our team can help! Simply speak with your HR or Payroll manager to see if they are open to introducing this benefit. We can arrange for a member of our team to contact them directly.

  • No cost for your employer – We handle all FBT reporting.
  • Payroll deductions are simple – Similar to extra super contributions.
  • Full support provided – Our team will guide your employer through the process.
  • Talk to us if you need help with explaining this to your employer or HR manager. 

Getting Started with a Novated Lease

What are the steps to getting a Novated Lease?

  1. Initial Consultation: Speak with a leasing consultant to discuss your options.
  2. Pre-Approval: Submit your application (even if you haven’t chosen a car).
  3. Employer Confirmation: We liaise with your employer to approve payroll deductions.
  4. Vehicle Selection: Choose your car and secure the best price.
  5. Lease Documentation: Review and sign agreements, including finance and running costs.
  6. Vehicle Delivery & Settlement: The car is delivered, and salary deductions begin.


Do I need a high income to benefit?
No, as long as you pay tax, you can benefit from a novated lease. The higher your taxable income, the greater the potential savings.

Can I get a quote before committing?
Yes, use our online Novated Lease Calculator to estimate costs.

What types of vehicles can I lease?
New and used vehicles
Private purchases and auction vehicles
Existing vehicles under finance (via sale and leaseback)


Managing Your Novated Lease

How do I pay for expenses?
AANT Fuel Card: Use it at most fuel stations across Australia.
Direct Payment by AANT: We pay for registration, insurance, servicing, and tyres.
Reimbursements: If you pay upfront, you can claim the cost through your account.

How do I track my money and make changes?
Access the AANT Salary Packaging online portal to view transactions, balances, and budgets.
Adjust running costs anytime via phone, email, or the portal.

What happens if I overspend or underspend on running costs?
Overspend: You may need to contribute extra through payroll.
Underspend: You can request a refund (taxable) or keep the funds for future expenses.

What happens to my lease if I leave my job?
If you switch jobs: The lease can be transferred to your new employer.
If you stop working: You can continue making payments directly to the finance company.
What is a residual payment?
At the end of the lease, a final residual (balloon) payment is due. This is set at the start and follows ATO guidelines. You can:

  • Pay the residual to own the car
  • Trade in or sell the car
  • Refinance the residual for a new lease

End of Lease Options

What happens at the end of my lease?
You can choose to:

  • Trade in and upgrade to a new car
  • Sell the car (any profit above the residual is yours, tax-free)
  • Refinance to extend the lease
  • Pay out the residual and own the vehicle

    Can I buy the car at the end of the lease?
    Yes, you can purchase the car by paying the residual value.

    What happens if I change employers or stop working?
    If you change employers: The lease moves with you.
    If you stop working: You can continue paying the lease directly to the financier.

Electric Vehicle (EV) Novated Leasing

How does a Novated Lease work for EVs?
The Electric Car Discount Bill 2022 makes EV leasing even more cost-effective, with:

  • No Fringe Benefits Tax (FBT) on eligible EVs
  • Lower running costs compared to petrol cars
  • Potential government rebates and incentives

    How far can an EV travel on a single charge?
    Most EVs range from 300km to 600km per charge. Daily commuting (50-100km) is easily covered.
    How much does it cost to run an EV compared to a petrol car?
    Charging an EV is significantly cheaper than refuelling a petrol car.
    Estimated savings: ~$2,900 per year on fuel.

    How do I install an EV charger at home?
    Most EVs come with a basic charger.
    A wall-mounted charger costs between $700 - $1,500, plus installation.

Common Questions

Do I have to use the car for work?
No, a novated lease can be used for personal travel only.

Can I lease more than one car?
Yes, if your employer allows multiple salary packaging agreements.

Can I include personal accessories in the lease?
Yes, provided they are included at the time of purchase.

Can I put personalised number plates on my leased car?
Yes, and the cost can be included in your lease.

Do I need a minimum number of kilometres to benefit?
No, a novated lease is beneficial regardless of how often you drive.

Can I still benefit if I only use my car on weekends?
Yes, the tax and GST savings apply no matter how often you drive.

What if I take maternity/paternity leave?
You will need to continue making payments, either via leave payments or directly.