Do Employers Benefit from a Novated Lease?

Employers can gain a lot from offering novated leases as part of their employee compensation packages. A novated lease is a three-way agreement between the employer, employee, and a finance company, allowing employees to lease a vehicle using their pre-tax salary. Here are some key advantages for employers.

1. Attracting and Retaining Talent

Offering novated leases can enhance a company's benefits package, making it more attractive to potential employees. This option demonstrates a commitment to employee financial well-being and adds to the overall appeal of working for the company. In a competitive job market, perks like this can help retain valuable staff while improving employee satisfaction. Employees who feel well-supported are more likely to remain loyal to their employers, reducing turnover rates.

2. Financial Advantages

Employers can benefit from several financial perks. Since novated lease payments are taken from employees’ pre-tax salaries, this reduces the employer’s payroll tax obligations. Furthermore, in certain cases, the employer may also reduce their fringe benefits tax (FBT) liability, especially when electric vehicles are included in the leasing options. 

3. Simplified Cost Management

With novated leasing, employees take on the responsibility for vehicle maintenance and running costs, easing the administrative burden on employers. This setup streamlines fleet management and eliminates the need for the company to directly manage or service a fleet of vehicles. Since novated leases are treated as off-balance-sheet items, they do not impact the company’s liabilities, which can improve cash flow and financial ratios.

4. Easy Implementation

Setting up a novated lease scheme is relatively straightforward. Leasing providers handle most of the administrative work, allowing businesses to introduce this benefit with minimal operational disruptions. This makes it an attractive option for employers who want to offer additional perks without increasing their workload.

Conclusion

Employers who offer novated leases not only boost their ability to attract and retain talent but also enjoy significant financial and operational advantages. Implementing a novated lease program is a smart, cost-effective way to enhance employee satisfaction while reducing payroll taxes and streamlining fleet management.

Curious about how a novated lease can benefit your company? Contact us today to find out how easy it is to set up and start saving!