The cost of a novated lease can look complicated at first glance. We’ve broken down the costs and considerations that we factor into a TFM novated lease, so you can understand the lease costs that are being funded by your salary deductions (pre-tax and post-tax). These costs can be summarised into five categories: novated lease costs , vehicle running costs (or services), compensation for employer GST liability on employee post tax contribution, income tax luxury vehicle adjustment (if applicable) and end of lease choices.  

A novated lease is a way for employees to lease and run a vehicle to be used privately using their salary, with their employer acting as a facilitator. It’s commonly offered as part of a salary packaging arrangement and can apply to a wide range of vehicles, including new and used vehicles.  

A novated lease combines employee compensation for vehicle lease and running costs into regular salary deductions in line with your pay cycle. Understanding how it works can help you decide whether it’s suitable for your circumstances and how you can benefit.  

Whether you're looking to lower your running costs,^ or simply enjoy the experience of an electric vehicle, a novated lease with TFM is a smart way to electrify your drive.  

Choosing a novated lease vehicle is very similar to choosing a car you’d purchase outright: it should suit your household, lifestyle, and day-to-day needs. However, because a novated lease bundles your running costs and uses pre-tax salary contributions, there are a few extra factors that can help you make a more cost-effective choice.  

This guide walks you through the most important things to consider when choosing a vehicle for your novated lease.  

A novated lease is a popular choice for Australians to lease a car and conveniently manage running costs through salary packaging. It’s a three-way agreement between you, your employer, and a finance/leasing company (e.g., TFM) who owns the leased vehicle, allowing you to pay for the lease rents of the car you use and its associated running costs, using a combination of pre-tax and post-tax salary deductions.   

For employees, this results in after-tax disposable income gains compared with the private purchase and operation of the same car outside of packaging. 

 For employers, packaging is intended to be a cost-neutral way to enhance employee remuneration. Here’s how it works.   

Important things to note about the Australian Government’s employer FBT exemption legislation for electric vehicles.

A novated lease can be a great value option for used vehicles. The process is largely the same, but the vehicle just needs to meet a few extra conditions. We also have some extra checks and documents that you need to be aware of if you are acquiring the vehicle from a private seller (as the consumer protections that come from a dealer sale do not apply). This guide helps you tick off these extra requirements to ensure compliance and protection for both you and TFM.

Getting a novated lease with TFM is designed to be a smooth process. This guide walks through each step and who needs to be involved in each part of the process, so you know what to expect.