Novated Lease On A Used Car

Can you get a novated lease on a used car?

There is no truth to the common myth that you can only salary-package a new car. So yes, it is possible to get a novated lease on a used car, and even on a car you currently own.

However, there are some rules you need to get familiar with in order to understand which cars cannot be leased. Here are 3 general considerations when applying for a novated lease on a used car:

              Car’s Age

A leased car cannot exceed more than 7 years old at the end of the lease term. For example, if you are interested in leasing a 3-year old car, you can only lease the car for a maximum of 4 years. However, there’s an exception to this rule in the case of a vintage car, where it has reached a point of already holding its value. Some employers also have their list of specific cars available for lease for their employees.

Novated Lease on Luxury Cars

When considering leasing a luxury car, it’s worth considering your employer type. If you’re a private employer, the lease on any car over the luxury limit is considered a company loan. To that effect, you can only claim deductions on the portion of the interest and depreciation under the set limit for the luxury car. But if you’re a government employee, the novated lease on used luxury car is considered just the same as with any other car. This is because the government does not have to pay any company tax.

Carrying Capacity

Utes that carry 1 tonne or more, and cars that carry more than 9 passengers cannot be leased because they are not classified as ‘vehicles’ under the Tax Act. It is best to consult an independent tax advice for these cars as they also treated differently.

While you’d still get to spend for the ongoing costs including petrol, registration, insurance and servicing whether you lease a new or used car, there still are some potential tax benefits and savings that you can enjoy.

Want to learn more about flexibility and novated leasing or need assistance from an expert novated leasing provider? Get in touch with us today!