A novated car lease is like a standard car lease but it is financed through salary packaging through your employer. The lease payments are made from your pre-tax income which your employer makes on your behalf. The lease payments include GST. As a novated car lease is taken from your pre-tax income it reduces the amount of tax you pay. As with a standard car lease there is a residual value at the end of the lease term which is to be paid to the financier. The lump sum can be re-financed, paid to own the car outright or you may wish to trade-in the vehicle.
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With a novated lease you can choose your own vehicle and organise a lease through an external supplier or your employer may already have a company they use. A Deed of Novation is signed for the term of the lease which means your employer has the obligation of making the lease payments on your behalf from your pre-tax income.
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