10 Benefits of Novated Leasing for Employers
Novated leasing is best known as a tax-effective way for employees to finance a vehicle through salary packaging. But what’s often overlooked is how beneficial this arrangement can be for employers. For businesses looking to offer competitive perks without additional overheads, novated leasing presents a compelling opportunity.
This article outlines the top 10 benefits of novated leasing for employers, and why it’s a smart, cost-effective addition to your employee benefits offering.
1. Cost-Neutral Benefit Offering
Unlike other perks that come with direct costs to the business, novated leasing is fully funded by the employee. The employer simply facilitates pre-tax salary deductions and remits payments to the lease provider. There’s no requirement for the business to cover the cost of the vehicle or associated expenses.
2. Payroll Tax Savings
One of the most attractive benefits of novated lease for the employer is the potential reduction in payroll tax liabilities. Since lease payments are deducted from an employee’s pre-tax salary, the gross payroll figure used to calculate payroll tax may be reduced. This can lead to substantial savings across a large workforce.
3. No Capital Outlay for Business Vehicles
Businesses often hesitate to offer company cars due to the capital required for purchase, not to mention maintenance and depreciation. Novated leasing eliminates this concern entirely – employees lease their own vehicle, removing the financial burden from the employer.
4. Simplified Vehicle Management
Employers aren’t responsible for maintaining a fleet or overseeing vehicle use. Novated leasing providers manage servicing, registration, insurance, and maintenance through bundled arrangements, leaving HR and finance teams free from added administrative tasks.
Learn More: The Ultimate Guide to Novated Leases for Employers
5. Attracting Talent
Salary packaging a car is an attractive benefit, especially in competitive job markets. Offering novated leasing helps differentiate your business and adds immediate value to a candidate’s total remuneration package, without raising salaries.
6. Enhancing Employee Retention
Employees are more likely to remain with their employer throughout the term of their novated lease, which typically ranges from two to five years. This can increase workforce stability and reduce turnover-related costs.
7. Fringe Benefits Tax (FBT) Efficiency
While novated leasing is subject to FBT, the structure of salary packaging often neutralises the impact through employee contributions. Additionally, eligible electric vehicles are currently exempt from FBT under Australian tax law, providing an additional incentive for both employer and employee.
8. Promoting Sustainability Through EV Leasing
By encouraging employees to lease FBT-exempt electric vehicles, businesses can align their benefits program with broader environmental goals. This supports ESG commitments and improves the company’s sustainability credentials without added expense.
9. Increased Employee Satisfaction
Providing access to novated leasing supports employee wellbeing by offering a tax-efficient way to own and run a vehicle. It also reduces the stress and complexity of managing car-related expenses, which are bundled into a single, manageable payment.
10. Easy Implementation via Trusted Providers
Modern novated leasing providers offer comprehensive support, from payroll integration to employee education. This means that employers can offer a high-value benefit with minimal disruption and administrative effort.
Conclusion
The benefits of novated lease for the employer go far beyond cost savings. It’s a strategic way to boost recruitment, retention, and employee satisfaction, without the overhead of traditional benefit programs or fleet ownership.
As more businesses recognise the value of salary packaging, novated leasing is becoming a must-have offering for forward-thinking employers. To find out how to introduce novated leasing into your workplace, speak to the team at One Car Group and discover how simple it is to get started.
