You might have heard colleagues or competitors mention novated leasing as an employee perk. Maybe you've wondered if it's just another complicated salary packaging scheme that'll create more work for your HR team. The truth? A novated lease for business owners can be one of the simplest, most cost-effective benefits you'll ever offer.
If you're running a small to medium-sized business in Australia, you're always looking for ways to attract good people without blowing the budget. Novated leasing lets you do exactly that. It's a three-way agreement between you, your employee, and a finance provider that makes car ownership more affordable for your team while keeping your costs minimal.
Let's break down how it works and why it might be the smartest addition to your employee benefits package.
How Novated Leasing Works for Business Owners
A novated lease is a salary packaging arrangement where your employee leases a car and you facilitate the payments through their pre-tax salary. The "novation" part simply means the lease obligations transfer from the employee to you as the employer, then back to the employee if they leave.
Here's the basic flow:
Your employee chooses their dream car (new or used, electric or petrol).
A finance provider arranges the lease and bundles all the vehicle running costs into one payment.
You deduct the lease payments from your employee's pre-tax salary and pay the finance provider.
Your employee drives the car for personal use while enjoying tax savings on their taxable income.
The beauty of this setup? You're not buying the car. You're not responsible for maintenance, insurance, or fuel. You're simply processing payroll deductions. The novated leasing provider handles everything else, from roadside assistance to rego reminders.
Why Offer Novated Leasing? The Benefits for Your Business
Cash flow stays healthy
Unlike purchasing fleet vehicles outright, novated leasing keeps your working capital intact. The car doesn't sit on your balance sheet, and you're not tying up funds in depreciating assets. For small business owners watching every dollar, that's a real advantage.
Attract and retain quality staff
Let's be honest: competing with big companies for talent is tough, but novated leasing levels the playing field. According to recent industry data, workplaces that offer salary packaging typically see uptake rates between 5-10% of their workforce. That might not sound huge, but those employees tend to stick around longer because they're getting genuine financial value.
GST savings add up
When you're registered for GST, you can claim input tax credits on the lease payments and running costs. That 10% saving gets passed straight to your employee, making their car even more affordable. It's a win that costs you nothing.
Zero FBT on electric vehicles
As a business owner, you’re probably aware of fringe benefits tax, the tax on employee benefits like gifts and rewards, expense reimbursement, low-or-interest-free loans, and more.
Here's where things get interesting for business owners in 2026. Eligible electric vehicles under the luxury car tax threshold of $91,387 attract zero Fringe Benefits Tax when novated-leased. That's a massive incentive, and it explains why EVs now represent up to 40% of new novated leases across Australia.
For your business, this means you can offer a high-value benefit without the usual FBT liability eating into your costs.
Administration is handled for you
You're busy running a business. The last thing you need is another administrative headache. With novated leasing, the finance provider manages the insurance renewals, service bookings, tyre replacements, and everything else. Your payroll team just processes one deduction per pay cycle.
Fleet discounts without the fleet
Even if your employee is leasing just one car, they benefit from the fleet discounts that leasing companies negotiate with dealerships. These can average 8-12% off the purchase price. Your team gets better deals without you needing to buy in bulk.
Understanding the Tax Benefits
The tax side of novated leasing is where your employees really benefit, and understanding it helps you explain the value to your team.
When lease payments come from pre-tax salary, your employee's taxable income drops. Less tax means more take-home pay, even after the car costs are deducted. For someone sitting on the cusp of a higher tax bracket, the savings can be substantial.
The current luxury car tax thresholds for 2024-25 are $91,387 for fuel-efficient vehicles (including EVs) and $80,567 for other cars. Staying under these limits helps maximise the benefits and keeps things straightforward.
GST credits flow through to employees too, creating an instant 10% reduction in costs. Combined with income tax savings, many employees find they can afford a newer, safer, or more efficient car than they could buy outright.
The Application Process: Simpler Than You Think
Setting up novated leasing for your business doesn't require months of planning or complex policy documents. Here's what actually happens:
Step one: You partner with a novated leasing provider like Easi. They'll walk you through the setup and provide template payroll instructions.
Step two: An employee expresses interest. They work directly with the provider to choose their car and get a quote.
Step three: The provider sends you a simple authority to deduct the agreed amount from the employee's salary.
Step four: You process the deduction each pay period and forward it to the provider.
Most business owners are surprised by how hands-off the whole thing is. You're not negotiating with car dealers, comparing insurance policies, or tracking service schedules. Your only job is the payroll deduction.
What Happens When an Employee Leaves?
This is the question every business owner asks, and it's fair. The good news: you're protected.
When an employee resigns or moves to a new employer, the lease obligations transfer back to them. They have a few options:
Transfer the lease to their new employer if that workplace offers salary packaging.
Continue the lease with post-tax payments until the lease term ends.
Pay out the remaining balance and keep or sell the car.
You're never stuck holding the lease. The finance provider manages the transition, and your involvement ends when the employee's final pay is processed.
At Easi, we've handled hundreds of these transitions for Australian employers over the past 30-plus years. The process is smooth because it's built into the original lease agreement from day one.
Why Business Owners Are Choosing Novated Leasing in 2026
The numbers tell the story. More than 190,000 novated leases are currently active across Australia, managed by providers working with businesses of all sizes. From Perth tech start-ups to national healthcare providers, employers are realising that novated leasing offers big-company benefits without big-company costs.
The surge in electric vehicle uptake has made novated leasing even more attractive. With FBT exemptions on eligible EVs, employees can access cleaner, more efficient cars while you support your workplace's sustainability goals.
Small business owners, in particular, appreciate how novated leasing creates a competitive edge in hiring. When you can offer genuine tax savings and simplified car ownership, you're not just another employer. You're giving people a reason to choose you and stay.
How Easi Supports Business Owners
We've been helping Australian businesses offer novated leasing since 1992. Over three decades, we've learned what matters to business owners: simplicity, transparency, and zero surprises.
When you work with Easi, you get a dedicated fleet consultant who understands payroll integration, compliance, and employee communication. We handle the complexity so you don't have to. Our online novated lease calculator lets your employees see potential savings in minutes, and our national reach means we support businesses across every state and territory.
Whether you're a sole trader thinking about offering this benefit for the first time or a growing company looking to formalise your salary packaging program, we've seen it all. That experience means fewer headaches for you and better outcomes for your team.
Ready to Explore Novated Leasing for Your Business?
Offering a novated lease for business owners isn't about adding another complicated benefit. It's about giving your employees something genuinely valuable while keeping your costs and admin minimal.
If you're curious about how it would work in your workplace, or you've got questions about GST, FBT, or lease terms, we're here to help. Give us a call on 1300 266 828 or get in touch online. We'll walk you through the numbers and show you exactly what novated leasing could mean for your business and your team.
