Who Owns the Car Under a Novated Lease?

Under a novated lease, the car is legally owned by the leasing company throughout the lease period. However, as the employee, you have the right to use and possess the vehicle during this time. Here’s a breakdown of how ownership works under a novated lease:

1. Legal Ownership
During the lease term, the leasing company is the official owner of the vehicle. This means they hold the title to the car until the lease ends or the vehicle is purchased.

2. Employee Usage
While the leasing company owns the vehicle, the employee gets full use of the car. This arrangement allows the employee to drive and maintain the vehicle as if they owned it, with the lease payments made through salary sacrifice.

3. Employer’s Role
The employer plays a key role in this arrangement by making the lease payments on behalf of the employee. These payments come from the employee’s pre-tax income, offering potential tax benefits. The employer's involvement continues only while the employee is working for them.

4. What Happens If You Leave Your Job?
If you leave your current job, the novated lease doesn’t disappear. Instead, the lease obligations usually transfer back to you, meaning you would be responsible for making the remaining payments directly to the leasing company.

5. End of Lease Options
At the end of the lease term, you have two main choices:

• Purchase the car by paying the residual value, which is a pre-agreed amount based on the car’s value at the end of the lease.

• Extend the lease, allowing you to keep driving the car under similar terms.

In summary, although the leasing company legally owns the vehicle during the lease, the employee has the right to use it. At the end of the lease, the employee can choose to buy the car or extend the lease.

Ready to explore the benefits of a novated lease? Contact us today to find out how you can drive the car you want while enjoying tax savings!