FAQs
Novated leasing and leasing an EV is simpler than you might think. We’re also here to support you every step of the way.
Our FAQs cover most of our common queries, but if you have a question, please do contact our friendly team.
Getting started FAQs
A novated lease occurs when you enter into a lease to purchase a car and then novate, or transfer, the lease to your employer. When you purchase a car through a novated lease, your employer pays for everything and takes the cost out of your pay.
Explore more about novated leasing.
With a novated lease, your finance costs come out of your pre-tax salary thus reducing your overall income and minimising the amount of tax you’ll pay.
Your vehicle finance and all its running costs are also bundled into a single payment, saving you money. And you’ll save GST on the price of your car and ongoing costs.
Your vehicle finance and all its running costs are also bundled into a single payment, saving you money. And you’ll save GST on the price of your car and ongoing costs.
- Novated leases are paid in pre-tax dollars from your income so that PAYG tax is reduced.
- Once a lease is novated to an employer, GST can be claimed and returned to you. This includes GST on the price of the car, and GST incurred in the running and operating of the car.
- Once a lease is novated to an employer, any fringe benefits tax (FBT) is reduced to zero by the use of a post-tax contribution, this is known as the Employee Contribution Method (ECM).
- Ongoing car costs and expenses are combined into one salary deduction amount for the life of the lease.
- Cars purchased using a novated lease are purchased at “fleet pricing” with reductions not usually available to you.
- When the lease ends, any profit made over and above the residual value, as determined by the ATO is tax-free to you.
Given that novated leases offer tax savings and cost benefits, offering novated leasing can make an employer more attractive to employees.
For an employee to gain a novated lease, the employer needs to implement a novated lease program.
A fully maintained novated lease includes management of all car running and operating costs.
This can include:
A fully maintained novated lease includes management of all car running and operating costs.
This can include:
- Finance costs
- Fuel
- Insurance and registration (including comprehensive, optional GAP cover and redundancy lease protection)
- Maintenance and service costs
- Tyres and windscreens
- Pre- and post-tax calculation to reduce fringe benefits tax (FBT)
- Management of GST claims
- Compliant and accurate FBT management and reporting
- A seamless payroll interface
- Extended warranties
- Car wash and detailing (if a budget has been included)
- Roadside assistance
- Management and administration fees
At Inside Edge, we offer flexibility and choice to ensure you get a car that suits your preferences, lifestyle and budget.
This can include:
This can include:
- New cars
- Used cars with a market value of more than $10,000 and generally not older than 15 years at the conclusion of the lease.
- Classic and collectible cars: we’re experienced in this area and can offer specialised advice.
- Cars currently owned outright by the employee or with an alternate form of finance.
EV FAQs
As part of your novated lease with Inside Edge, you receive a Chargefox card. You can use this card to charge at any Chargefox charging station, including Chargefox-connected stations in your home or business. All charges incurred by the use of this card will be billed to your account.
To answer this question, ask yourself how many times have you run out of petrol?
If the answer is rarely, this indicates you are aware that you need to re-fuel and you manage that effectively.
Similarly, most EVs will let you know how long you have to go and furthermore, where the charging points are. And remember, you can charge it at home every night.
If the answer is rarely, this indicates you are aware that you need to re-fuel and you manage that effectively.
Similarly, most EVs will let you know how long you have to go and furthermore, where the charging points are. And remember, you can charge it at home every night.
Yes, the number of public charging points is increasing every day. The Government is also committing to increase infrastructure across the country as sales increase.
Visit plugshare.com to explore charging points across Australia.
Driving an EV comes with many benefits.
- Environmental friendliness
- FBT savings
- Reduced servicing costs
- Re-sale values on EVs are strong
Explore more about leasing an electric vehicle.
As part of the Federal Government’s Climate Policy, EVs with low-to-zero emissions are exempt from FBT.
The policy removes the FBT liability on electric vehicles that are battery electric vehicles or plug-in hybrid vehicles, with a purchase price below $89,332 until June 2025.
The policy removes the FBT liability on electric vehicles that are battery electric vehicles or plug-in hybrid vehicles, with a purchase price below $89,332 until June 2025.
Car & travel FAQs
InsideEDGE has an extensive dealer network operating Australia-wide. The dealer network provides competitive pricing and the ability to source cars from interstate and regional dealers.
Through this network, InsideEDGE can obtain the best prices on trade-in cars and dispose of old vehicles. This ensures novated drivers receive the best price on new cars and their trade-ins.
Through this network, InsideEDGE can obtain the best prices on trade-in cars and dispose of old vehicles. This ensures novated drivers receive the best price on new cars and their trade-ins.
No, a majority of novated leases in Australia are for employees who have little or no business use.
Though, if a car is used for business use it’s also eligible for a novated lease.
Though, if a car is used for business use it’s also eligible for a novated lease.
Generally speaking, an employer will provide an employee with a car allowance if there is an expectation of business travel to be carried out in the employee’s car. Usually, the car allowance is taxed at the same rate as the employee’s salary.
A novated lease is the most effective means of spending a car allowance and receiving the tax savings available in line with the business usage.
Chat with our friendly team to explore your situation and how you can make the most of a car allowance.
A novated lease is the most effective means of spending a car allowance and receiving the tax savings available in line with the business usage.
Chat with our friendly team to explore your situation and how you can make the most of a car allowance.
No, whether you travel 5,000 km or 35,000 km per year, a novated lease will deliver tax savings.
During a consultation, we’ll discuss expected driving distances to provide accurate estimates of annual car running costs.
During a consultation, we’ll discuss expected driving distances to provide accurate estimates of annual car running costs.
A logbook is only required in circumstances of high business use. Through consultation with a novated lease specialist, it may be determined the keeping of a logbook will deliver the best financial outcome.
A novated lease can be taken over any of the following periods:
- 12 months
- 24 months
- 36 months
- 48 months
- 60 months
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Luxury car: a luxury car is a new car defined by the ATO by its price and its fuel efficiency.
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Luxury car tax: determined by the ATO, this is applied to cars over a threshold and of certain fuel efficiency. A fuel-efficient car is defined as any car with a fuel consumption of 7 litres per 100 km or less. For the financial year of 2023-2024, the threshold has been lifted to $89,332. Cars that meet the luxury car tax threshold attract a luxury car tax of 33%. The luxury car tax is invoiced at the time of sale by the car dealer.
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Luxury car adjustment: the ATO guidelines state that an employer cannot claim the full lease rental for taxation purposes of a car with a purchase price over the luxury car tax threshold.
The lease of a luxury car will be subject to Schedule 2E, Division 42A of the Income Tax Assessment Act 1936 (ITAA 1936) which deems the lease to be a “notional sale and loan transaction”.
When an employer treats a novated lease on a luxury car as a “notional sale and loan transaction” there is an increased cost to the employer. This is as a result of the employer meeting the cost of the lease rental however unable to claim interest and depreciation as a tax deduction over and above the luxury car tax threshold.
Inside Edge calculates and provides a luxury car tax adjustment as part of the employee’s novated lease costs. The adjustment will offset the additional cost incurred by the employer while maintaining the maximum benefit to the employee.
Payments & expenses FAQs
The Australian Taxation Office (ATO) guidelines state that the following items cannot be claimed as part of a novated lease:
- Tolls
- Parking infringements
- Fines
The operating costs for a novated lease are determined on an individual basis.
The choice of car and its age, the length of the lease and the expected annual kilometres all play a role in calculating the car’s costs.
Budgets are based on the whole lease costs to anticipate all costs during the car’s ownership. Therefore, budgets should not need to change during the lease unless circumstances change.
The choice of car and its age, the length of the lease and the expected annual kilometres all play a role in calculating the car’s costs.
Budgets are based on the whole lease costs to anticipate all costs during the car’s ownership. Therefore, budgets should not need to change during the lease unless circumstances change.
Under a novated lease, because most employers are GST-registered, GST is claimable. This represents a 10% saving on ownership and running costs of a car.
This is one of the key benefits to employees, not available under any other form of car finance. Under a novated lease, the GST payable on the following items can be claimed:
This is one of the key benefits to employees, not available under any other form of car finance. Under a novated lease, the GST payable on the following items can be claimed:
- The purchase price* of the car
- Lease rentals
- Servicing
- Maintenance
- Repairs
- Tyres
- Fuel
- Comprehensive insurance*
- Registration*
- Management fees
At Inside Edge, we structure novated leases in such a way that FBT is reduced to zero.
This is achieved through a detailed understanding of each employee’s circumstances and constructing each employee’s novated lease with a combination of pre-tax and post-tax deductions.
This is achieved through a detailed understanding of each employee’s circumstances and constructing each employee’s novated lease with a combination of pre-tax and post-tax deductions.
Under FBT legislation there are two methods used to calculate the potential FBT associated with novated leases, the “statutory formula method” and the “operating cost method”.
- Statutory formula method: this is used for a majority of novated leases as most employees do not use their cars for business purposes. The statutory formula provides tax savings and no logbook or kilometer justification is required.
- Operating cost method: if a car is used for business purposes, the operating cost method may deliver the best financial outcome. This requires a logbook to be kept for 12 weeks to establish and confirm the percentage of business use. A logbook business use confirmation needs to be signed by a registered tax agent or accountant and/or the employer. A new logbook needs to be completed at least every 5 years. This percentage is then applied to the total operating costs of the car and the FBT is calculated on the private portion of the costs.
Before 2011, FBT calculations under the statutory formula were determined by the annual kilometres travelled. The legislation changed and now one statutory rate of 20% applies.
Novated leases maintain the same benefit regardless of kilometres travelled.
Under FBT legislation any time an employee contributes to a benefit being supplied by an employer, the contribution will reduce the fringe benefit obligation.
You can choose to make a contribution when the tax paid on the contribution is less than the FBT rate. In calculating the benefits of a novated lease, Inside Edge calculates the contribution required to bring FBT to zero.
Once all costs associated with ownership and running of the car, and the lease rental are determined, the appropriate post-tax deduction is used to bring the FBT to zero. The remainder becomes a pre-tax deduction.
These figures form the basis of the payroll deductions and are determined by the employer’s payroll cycle, be it weekly, fortnightly or monthly.
These figures form the basis of the payroll deductions and are determined by the employer’s payroll cycle, be it weekly, fortnightly or monthly.
Usually, the budgets will match the costs over the life of the lease.
In the event payroll deductions do not match expenses, a re-costing of budgets may be necessary. Re-costings can be instigated by the novated lease holder or by Inside Edge.
Inside Edge monitors the costs and balance to make sure maximum tax benefits are being achieved without accruing negative balances within the lease account.
In the event payroll deductions do not match expenses, a re-costing of budgets may be necessary. Re-costings can be instigated by the novated lease holder or by Inside Edge.
Inside Edge monitors the costs and balance to make sure maximum tax benefits are being achieved without accruing negative balances within the lease account.
Upon receipt of salary deductions, Inside Edge holds funds in trust in anticipation of the costs related to the day-to-day running of the car.
You can view all deductions and expenses via the Inside Edge portal.
Upon termination, credit funds are returned to the driver via payroll, and debit funds need to be paid by you as the driver.
You can view all deductions and expenses via the Inside Edge portal.
Upon termination, credit funds are returned to the driver via payroll, and debit funds need to be paid by you as the driver.
The finance lease is arranged by Inside Edge. We use a panel of banks and financiers to ensure the best product, terms and interest rates available are provided at all times.
Maintaining your car FAQs
At the commencement of a novated lease, a choice of fuel cards is available to assist with the purchase of fuel:
- Ampol Card
- BP Card
- Shell Card
Inside Edge utilises the Smart Fleet network to provide an efficient service and maintenance program. This network represents all authorised manufacturer service outlets, tyre and windscreen replacement outlets and recognised service centres.
When a car is due for service, you can book into your preferred authorised service centre and advise that the vehicle is managed by Inside Edge via the Smart Fleet program.
The service centre will seek service and maintenance authorisation via Smart Fleet on 1300 780 097 before commencing any work on the vehicle which will protect against overservicing and overcharging.
This is applicable for all servicing, general maintenance (including batteries) and tyre replacements and repairs.
When a car is due for service, you can book into your preferred authorised service centre and advise that the vehicle is managed by Inside Edge via the Smart Fleet program.
The service centre will seek service and maintenance authorisation via Smart Fleet on 1300 780 097 before commencing any work on the vehicle which will protect against overservicing and overcharging.
This is applicable for all servicing, general maintenance (including batteries) and tyre replacements and repairs.
New cars are sold with car warranties which may vary in duration depending upon the manufacturer.
An extended warranty can be purchased and is an extension of the initial manufacturer’s warranty to match the lease period or ownership intentions.
An extended warranty can be purchased and is an extension of the initial manufacturer’s warranty to match the lease period or ownership intentions.
A car under a novated lease must be under comprehensive insurance at all times. Inside Edge offers comprehensive insurance as part of the novated lease program. You can also organise your own comprehensive insurance if preferred.
Lease protection insurance is an optional insurance made available by Inside Edge. It provides financial protection in the event of involuntary redundancy or disability for a period of up to six months. The current policy also includes an option to return the vehicle with a maximum claim amount of AUD $15,000.
- Registration: under a novated lease, as the car is owned by and registered in your name, the registration renewal will be sent to your address. You must pay the premium and seek reimbursement from Inside Edge.
- Comprehensive insurance: if you choose to arrange your own insurance, this will need to be paid and then reimbursed from Inside Edge.
- Fuel costs: fuel not purchased with the fuel cards provided by Inside Edge can be reimbursed.
- Insurance excess: in the unfortunate event of an accident requiring an insurance claim and the payment of an excess, the excess may be claimed if there are sufficient surplus funds or if an adjustment is made to increase the deductions. Once sufficient funds have accumulated the excess can be reimbursed via Inside Edge.
To gain reimbursement, simply login and follow the prompts to enter and submit your claim!
Business use doesn’t hinder the benefits of a novated lease.
The difference between private use and a high percentage of business use is in the method of FBT calculation.
Keep in mind: in most instances travel to and from work is considered private travel, not business use.
The difference between private use and a high percentage of business use is in the method of FBT calculation.
Keep in mind: in most instances travel to and from work is considered private travel, not business use.
Change in circumstances FAQs
If you leave your employment, the novation agreement is cancelled and the lease and the car payments become your responsibility.
It’s essential to notify Inside Edge of any changes in circumstances so that we can help you plan in advance.
Upon leaving employment, you have three options:
If there is a credit, the amount will be paid to the previous employer who will pay you via payroll, the amount is taxed at the marginal tax rate. Any negative balance or shortfall will need to be paid by you to Inside Edge.
It’s essential to notify Inside Edge of any changes in circumstances so that we can help you plan in advance.
Upon leaving employment, you have three options:
- Re-novate the finance lease to a new employer
- Continue with the finance lease in your name via direct debit
- Sell the car and payout the lease
If there is a credit, the amount will be paid to the previous employer who will pay you via payroll, the amount is taxed at the marginal tax rate. Any negative balance or shortfall will need to be paid by you to Inside Edge.
Inside Edge does the heavy lifting to renovate your lease for you. Once set up, your payments will be deducted via your new employer.
If your new employer doesn’t have an existing program, Inside Edge will assist in implementing a program.
If your new employer doesn’t have an existing program, Inside Edge will assist in implementing a program.
Selling your car before the lease ends is an option.
It’s helpful to keep in mind that a lease agreement is a finance contract with a fixed rate for a fixed term and if a lease agreement is paid out during the contract the payout figure may be higher than the market value of the car.
Careful consideration should be given, then, before choosing this option.
It’s helpful to keep in mind that a lease agreement is a finance contract with a fixed rate for a fixed term and if a lease agreement is paid out during the contract the payout figure may be higher than the market value of the car.
Careful consideration should be given, then, before choosing this option.
Inside Edge will make contact with you at least four to six months before the lease ends to discuss options.
The options include:
- Refinancing the lease for a further period
Inside Edge will assist the employee to refinance/rollover the residual value for a further lease period to suit your circumstances. - Purchasing a new car and trading in or selling the existing car
Inside Edge can negotiate trading your current car with a new car to ensure the maximum value is achieved. The dealer will trade the existing car in, pay the residual value, and pay any profit over and above the residual value to you. If the car isn’t worth the residual value, you’ll need to make up the shortfall. Most employees, however, comfortably achieve the residual value. When the ATO minimum residual values are implemented any profit over and above the residual value is tax-free to you. - Payout the car
At the end of the lease, you have the right to offer to purchase the car at the residual amount plus GST and own it outright.
If you take extended leave from employment and are not receiving pay, the novation of the lease will cease and you will be responsible for the lease and running costs.
If extended leave is planned, Inside Edge can assist with payment planning by increasing deductions to meet the car’s running costs while on leave.
If extended leave is planned, Inside Edge can assist with payment planning by increasing deductions to meet the car’s running costs while on leave.
A residual value is an amount owing at the conclusion of the lease and generally represents an estimate as to the future value of the car. The ATO has guidelines on the appropriate residual value to be used under a novated lease.
The effect of a residual value on a novated lease will reduce the monthly lease rental and limit the benefit of a novated lease, it’s for this reason the ATO has set out guidelines.
Fortunately, at the end of the lease, Inside Edge makes contact with you to discuss the options.
There’s no obligation to meet the residual value liability. This can be done by any of the following options:
The effect of a residual value on a novated lease will reduce the monthly lease rental and limit the benefit of a novated lease, it’s for this reason the ATO has set out guidelines.
Fortunately, at the end of the lease, Inside Edge makes contact with you to discuss the options.
There’s no obligation to meet the residual value liability. This can be done by any of the following options:
- Pay the residual value to own the car outright.
- Refinance the residual value for a further lease term.
- Trade the vehicle in. In this case, the dealer will pay the residual value and purchase a new vehicle. It should be noted any shortfall between the car’s market value and the residual value will need to be paid by the driver and any surplus will be paid to the driver with no further tax implications.