EV Novated lease requirements
Important things to note about the Australian Government’s employer FBT exemption legislation for electric vehicles.
Roadside Assist Guide
If your novated lease includes TFM Roadside Assist, it is available to help you 24/7. Our emergency Roadside Assist team can help if you get stuck either because you’ve might have broken down, got a flat tyre, flat battery, run out of fuel or locked your keys in the car.
If you’ve selected roadside assistance from a state-based provider in your contract and require assistance, please contact them directly.
Registration and insurance renewals
Renewing your novated lease vehicle’s registration and insurance is easy—we handle most of the paperwork for you. This article walks you through what you need to know to keep your car registered and insured for the lease.
Fair wear and tear standards
It is your responsibility as the lessee to maintain your novated lease vehicle to a reasonable standard for the duration of your lease agreement. This guide outlines the acceptable Fair Wear and Tear standards for a passenger vehicle driven for less than 100,000 kilometres. However, this list is not exhaustive, and TFM will reasonably assess any matters that aren’t covered.
Servicing and Maintenance
When you take out a novated lease with TFM, your vehicle servicing and maintenance may be included as part of your lease. This guide explains how to book a service, where to take your vehicle, and how payment works so you can help keep your vehicle in good condition. You are responsible for ensuring the vehicle is maintained to the manufacturer’s requirements to comply with the warranty conditions.
Tyre replacement and care
When you take out a novated lease with TFM, tyre replacement and care may be included in your lease package. This guide explains how to replace or repair your tyres, where to go, and how payment works.
Fuel and Energy Management
The simplicity of a novated lease means that all your energy expenses, including fuel and/or charging are bundled into one payment. This article outlines how to purchase, manage and track fuel and/or the charging for your vehicle.
Roadside Assist Guide
If your novated lease includes TFM Roadside Assist, it is available to help you 24/7. Our emergency Roadside Assist team can help if you get stuck either because you’ve might have broken down, got a flat tyre, flat battery, run out of fuel or locked your keys in the car.
If you’ve selected roadside assistance from a state-based provider in your contract and require assistance, please contact them directly.
Registration and insurance renewals
Renewing your novated lease vehicle’s registration and insurance is easy—we handle most of the paperwork for you. This article walks you through what you need to know to keep your car registered and insured for the lease.
Servicing and Maintenance
When you take out a novated lease with TFM, your vehicle servicing and maintenance may be included as part of your lease. This guide explains how to book a service, where to take your vehicle, and how payment works so you can help keep your vehicle in good condition. You are responsible for ensuring the vehicle is maintained to the manufacturer’s requirements to comply with the warranty conditions.
Tyre replacement and care
When you take out a novated lease with TFM, tyre replacement and care may be included in your lease package. This guide explains how to replace or repair your tyres, where to go, and how payment works.
Fair wear and tear standards
It is your responsibility as the lessee to maintain your novated lease vehicle to a reasonable standard for the duration of your lease agreement. This guide outlines the acceptable Fair Wear and Tear standards for a passenger vehicle driven for less than 100,000 kilometres. However, this list is not exhaustive, and TFM will reasonably assess any matters that aren’t covered.
Novated Leasing FAQs
To get started, choose a vehicle that suits your lifestyle and budget. We’ll provide you with a quote estimate and set up a lease and salary packaging agreement between you, your employer and TFM.
Once all parties sign the agreement, you can pick up your vehicle and start enjoying the benefits of your novated lease.
For more information, see our How it Works page..
TFM can finance any make or model of vehicle. You can also lease a used vehicle or even your own vehicle. However, some restrictions may apply. Contact us for more details.
To qualify for novated leasing, a vehicle must:
• Be a passenger vehicle with fewer than nine seats.
• Have a load-carrying capacity of less than one tonne.
• Not be a boat, caravan, truck or motorbike.
• Car cannot be older than 10 years at the end of its lease term
You can either source the vehicle yourselfor allow our team to do the work for you.. TFM has access to a wide dealer network, helping you get the best possible price, and best of all we charge absolutely no fees to you or the dealer to do so.
There is no wrong or right answer, you nominate the kms you do based on how much you drive and that helps us work out how much to set aside to cover your expenses
In many cases, this makes a novated lease useful regardless of how many kms you drive, but the exact benefit depends on your income, vehicle and personal circumstances. It’s always best to get independent financial advice before deciding.
For more information, please see our article on Novated Leasing Benefits.
Check your employer’s salary packaging/novated lease/motor vehicle policy to see if you are eligible to package a vehicle via a novated lease. If your employer doesn’t have a novated leasing agreement in place with TFM and is wanting to, please have your employer contact TFM.
Upfront costs:
- Car price and accessories
- Dealer delivery charges
- First year registration and CTP insurance
- Novated lease establishment fee
- Personal Property Security registration fee
Running costs:
- Mechanical repairs, maintenance and servicing
- Comprehensive insurance (using TFM Insurance or your own provider)
- Fuel and/or Energy
- Car washing
- Registration/CTP renewals
- Replacement tyres
- Roadside assistance
- Tolls
- Fines
- Parking
With a novated lease, your monthly payment is fixed but can be adjusted if your driving habits change.
From the start, we set up a budget that you can use for both your regular running costs each month (like fuel/charging, servicing, tyres and roadside assistance) and your larger annual bills (like registration, CTP and comprehensive insurance).
Each pay, you make a salary contribution to your lease budgets, and TFM uses these funds to manage and pay these costs on your behalf. That way, your everyday expenses and larger annual billed items are already planned for.
Fuel
If you’ve chosen a petrol or diesel-powered vehicle, you’ll receive a TFM Motorpass fuel card. Accepted at around 90% of petrol stations across Australia, it’s a smart way to buy fuel, oil or carwash services. You’ll also receive discounts off the pump price.
For more information, please see our article on Fuel and Energy Management.
Charging
If you’ve chosen an EV, you can elect to receive a TFM EV Charge Card. You can use this card to charge your vehicle at Chargefox stations. Chargefox is Australia’s largest and fastest growing public EV charging network, with stations available across metropolitan, regional and rural areas.
Alternatively you can also charge your vehicle at home and claim reimbursement for the electricity used calculated as a flat cent per kilometer rate as advised by the ATO.
For more information, including how to claim home charging reimbursements, please see our article on Fuel and Energy Management.
Servicing and maintenance
If your contract includes servicing and you service your vehicle at your vehicle manufacturer’s service centre, you don’t need to pay them. The service centre invoices us directly and we can draw the funds from your maintenance budget, just tell them it’s a TFM managed vehicle at the time of booking.
If you use a qualified mechanical repairer outside TFM’s Approved Service Network, you’ll just need to pay the service provider directly and claim reimbursement from TFM.
For more information, please see our article on Servicing and Maintenance.
Replacement tyres
If your contract includes tyre care and replacement, and you book with a TFM-approved tyre outlet (such as Bob Jane, Bridgestone, Goodyear or mycar), you won’t need to pay, just tell them it is a TFM managed vehicle at the time of booking. The outlet will invoice us directly and we can draw the funds from your maintenance budget.
If you choose a qualified tyre outlet outside our network, you’ll need to pay the provider directly and claim reimbursement from TFM (See our Expense Reimbursement Process article for details).
For more information, please see our article on Tyre Replacement and Care.
Registration and CTP renewal
During the Novated period TFM handle all the CTP and registration payments, extracting the funds from your running costs budget. We'll pay your registration fee 4-5 weeks before your renewal date. You won't need to do anything, and we'll send you an SMS and email to confirm it's paid.
For more information, please see our article on Registration and Insurance Renewals.
Comprehensive Motor Vehicle Insurance*
If your Comprehensive Motor Vehicle Insurance is with TFM, the cost has been factored into your salary deductions.
If you have self-arranged comprehensive motor vehicle insurance, you’ll need to pay for your policy directly and seek reimbursement when your budget has sufficient funds available.
For more information, please see our article on Registration and Insurance Renewals.
Roadside assistance
If your contract includes TFM Roadside Assist, the cost has been factored into your salary deductions. Any charges (e.g. batteries or additional towing) that may apply will be invoiced and charged to your lease contract.
If you’ve selected to include your own roadside assistance, you will need to include a budget into your lease, then pay for this yourself and claim a reimbursement when your budget has sufficient funds.
Under Australian tax law, a novated lease is considered a fringe benefit. This means your employer must account for (FBT) on its value.
Most arrangements use the Employee Contribution Method (ECM), which offsets the FBT by deducting some costs from your post-tax salary, often reducing or eliminating the FBT payable.
- Statutory Formula Method: A flat 20% of the car’s base value. Best suited for cars primarily used for personal driving.
- Operating Cost Method: Based on business vs private use, tracked with a 12-week logbook. Ideal for vehicles used extensively for work.
For more information, please see our article on Novated Leasing Benefits.
There is no FBT payable when your vehicle meets all of the following:
- It’s a Battery Electric Vehicle (BEV).
- First used (and held) on or after 1 July 2022.
- Has never been subject to Luxury Car Tax (LCT).
- Has a payload under one tonne.
- Seats eight passengers or fewer.
Whilst there is no FBT payable, it will result in a RFBA amount (refer below).
The tax benefits of a FBT exempt vehicle can be calculated using our online calculator.
For more information, please see our article on Electric Vehicles on a Novated Lease.
The ECM helps reduce the FBT on your novated lease by splitting your car costs into pre-tax and post-tax payments.
The post-tax portion offsets the FBT your employer would normally pay, often reducing or eliminating it entirely, giving you the best possible tax outcome.
If your novated lease is for an eligible electric vehicle, your employer will not have to pay FBT on it. This means your repayments can be made entirely from your pre-tax salary, with no post-tax contribution required.
Please note: even though the FBT is exempt, the full value of the car benefit will still appear on your income statement as a reportable fringe benefit. This doesn’t affect your take-home pay, but it may be used when calculating things like Medicare levy surcharge, student loan repayments, child support or family tax benefits.
A RFBA is the value of a benefit (like a car under a novated lease) that needs to be shown on your income statement for tax purposes.
If your vehicle isn’t an FBT-exempt electric vehicle and there’s still a taxable value after any post-tax contributions, you’ll have an RFBA. This doesn’t change your take-home pay, but it may affect things like your Medicare levy surcharge, student loan repayments, child support or family tax benefits.
If your post-tax contributions completely remove the taxable value, no RFBA will apply.
Special RFBA rules also apply for:
- FBT-exempt electric vehicles (see above)
- Employees of charities, public hospitals or other not-for-profit organisations
If your novated lease is on a vehicle that costs more than the luxury car tax limit, your employer may need to pay extra income taxes.
To balance this out, an additional pre-tax salary sacrifice (called an LVA) is included in your lease. This helps cover the employer’s extra tax cost, so they’re not out of pocket for providing a higher-value vehicle.
Note that LVA is separate to the calculations for dealer Luxury Car Tax. A car without any dealer LCT may still be eligible for LVA is it’s over the threshold.
Please visit the ATO for an up-to-date list of Luxury Car Tax thresholds.
If you leave or have decided to leave your current employer, please let us know straight away.
If the new employer is an existing TFM customer, willing to enter into a novated agreement, or have their own existing provider, you can maintain reinstate your lease services and transfer the lease to your new employer. Your new employer will just need to agree to and sign the novation agreement provided by TFM.
If your new employer does not wish to enter a novation agreement, you can either:
- Continue finance lease payments directly ,
- Pay out your lease, or
- Make an offer to purchase the vehicle based on an Early Termination quote provided by TFM.
To learn more visit our what if I change employers page (Info on What if I change employers_17.12.25.docx)
When setting up your lease, we’ll ask for an estimated annual kilometre allowance to help us budget for your running costs.
If your circumstances change (for example, you move further from work), we can adjust your budgets at any time.
You’ll receive quarterly statements to track your spending, and you can view your budget position anytime through our online portal or by contacting us directly.
For more information, please see our guide on Understanding Your Lease Budgets.
Residual value is a pre-estimate of your vehicle’s value at the end of the lease and excluding GST which is applied on termination of your lease.
It’s calculated when you start the lease and used to determine your monthly payments.
The minimum residual value is set by ATO guidelines and expressed as a percentage of the car’s original price:
| Lease term | Residual values % |
|---|---|
| 12 months | 65.63% |
| 24 months | 56.25% |
| 36 months | 46.88% |
| 48 months | 37.50% |
| 60 months | 28.13% |
We’ll contact you when you approach the end of your lease to talk through your options. You have four options:
- Get a new vehicle
If you want to get a different vehicle, we can help you choose a suitable model for your lifestyle and budget. - Extend your novated lease
If you’re happy with your current vehicle, you can extend the lease for an additional term that suits you. - Keep your vehicle and end your novated lease
Pay the residual value of your current lease plus GST, and once this and all your rental payments have been received, you'll own the vehicle outright. - Return your vehicle and end your novated lease
You can return your vehicle to TFM and end your novated lease.
Please note: You will be liable for any shortfall between the residual value (plus GST), outstanding rentals, sale price, and disposal costs.
Return your vehice and end your novated lease
You can return your vehicle to TFM and end your novated lease.
Please note: You will be liable for any shortfall between the residual value (plus GST), outstanding rentals, sale price, and disposal costs.
Please note: You will be liable for any shortfall between the residual value (plus GST), outstanding rentals, sale price, and disposal costs.
For more information, please see our article on Understanding Your End of Lease Options.
