There's a good chance your employer is already offering you a benefit that could save you thousands of dollars on your next car — and you probably have no idea it exists.
It's called a novated lease, and it lets you pay for a car using pre-tax dollars straight from your salary. That means less income tax, no GST on the car, and all your running costs bundled into one simple payment. Most South Australian employees we speak to have never heard of it, or they've heard the name but assumed it was only for executives or fleet drivers.
It isn't. And if you're on a regular PAYG salary, you could be using it right now.
Let us walk you through everything
So, What Actually Is a Novated Lease?
A novated lease is a three-way arrangement between you, your employer, and a finance company. Here's how it works at its simplest: instead of you taking out a car loan in your own name, your employer takes on the lease on your behalf and pays it directly from your salary each pay cycle. The car is still yours to drive — you choose it, you use it, you keep it.
The magic is in the word "pre-tax." Because your employer deducts the lease payments before your taxable income is calculated, you end up paying less income tax. You're not earning less — you're just structuring more of your pay toward your car in a way the ATO allows.
One question we hear a lot: "What if I change jobs?" Fair question. If you leave your employer, the lease doesn't disappear. It simply reverts to a standard finance contract in your name. You keep the car, you keep making the same repayments — just from your own account rather than through payroll. And if your new employer offers salary packaging (many do), you can transfer the lease across and pick up the pre-tax benefits again from day one.
How Does the Money Actually Work?
The savings in a novated lease come from a few different places, and they add up quickly.
The biggest one is reducing your taxable income. When a portion of your salary goes toward your car before tax is calculated, your taxable income drops. That means your PAYG tax bill is smaller, which effectively puts more money in your pocket each pay cycle without you needing to do anything differently.
The second saving comes from GST. Because the vehicle is purchased through a commercial leasing provider, the GST on the car's purchase price is removed from the equation — a saving you simply don't get when you walk into a dealership and buy a car yourself. The same applies to your ongoing running costs; fuel or electricity, servicing, tyres and insurance are all paid through your packaging account without the GST component.
The third piece is bundled running costs. Rather than juggling fuel receipts, insurance renewals and service bills separately, everything rolls into one predictable deduction from your pay. It simplifies your life considerably.
We deliberately haven't included specific dollar figures here because the savings depend on your individual salary, the vehicle you choose, and your personal tax situation — and we want to give you accurate numbers, not generic ones. The best next step is to speak with your employer's salary packaging provider, or contact our finance team directly. We'll run through realistic figures for your situation with no obligation.
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Fast-track my quoteThe EV Advantage: The FBT Exemption Explained
If you're considering an electric vehicle, there's an additional benefit worth knowing about — and it's a significant one.
The federal government introduced an FBT (Fringe Benefits Tax) exemption for eligible zero and low emissions vehicles under a novated lease. Normally, using a car provided through your employer can trigger a fringe benefits tax liability. The exemption removes that liability entirely for qualifying EVs, which makes novated leasing an electric vehicle dramatically more cost-effective than buying one outright.
To qualify, the vehicle generally needs to be a battery electric vehicle (BEV) or hydrogen fuel cell vehicle, must have been first used on or after 1 July 2022, and must fall below the Luxury Car Tax threshold for fuel-efficient vehicles. That threshold is reviewed annually by the federal government, so rather than quoting a figure that may change, we'd point you directly to the ATO's official page on the electric car FBT exemption for the current limit.
It's also worth noting that plug-in hybrid vehicles (PHEVs) lost eligibility for this exemption from 1 April 2025, with limited exceptions for arrangements established before that date. If you're comparing a PHEV with a full BEV, this is an important factor in the numbers.
One thing to be aware of: even with the FBT exemption, the benefit is classified as a Reportable Fringe Benefit on your annual income statement. This doesn't increase your income tax — but it can affect HECS/HELP repayments, child support assessments, and eligibility for some government payments. Worth a conversation with your salary packaging provider if any of those apply to you.
What's Included in a Novated Lease?
This is one of the things people find most surprising. A novated lease isn't just about the car repayment — it can include most of the costs of running your car, all bundled into the one pre-tax payment.
Here's what's typically included:
- Fuel or electricity — whether you're filling up at the bowser or charging at home, this is covered
- Scheduled servicing and maintenance — routine services, filters, brake pads and the like
- Comprehensive car insurance — covered and paid from your packaging budget
- Registration — your annual rego, sorted
- Tyres — replacements when you need them
Rather than managing all of these expenses yourself with post-tax money, they're estimated upfront, bundled into your regular deduction, and managed through the packaging account. It's a genuinely simpler way to own and run a car.
Novated Lease vs. Buying a Car Personally — An Honest Comparison
We think novated leasing is a genuinely excellent option for most salaried employees. But it's also not for everyone, and we'd rather give you the full picture.
Where a novated lease wins:
A novated lease lets you pay for your car and its running costs using pre-tax income — something a personal loan simply can't do. You also avoid GST on the purchase price and on most running costs, which is a saving that's built in from the start. For an eligible EV, the FBT exemption adds another significant layer of benefit. And everything is consolidated into one simple payroll deduction — no juggling separate bills.
Where buying personally or using a car loan wins:
When you buy a car with a personal loan, you own it outright from day one and can do whatever you like with it. You can also shop the entire lending market to find the lowest interest rate, whereas novated lease providers typically work with a set panel of lenders. A personal purchase is also completely independent of your employment — there's no tripartite agreement to manage if you change jobs.
The honest summary: For most PAYG employees who plan to stay employed and drive a car regularly, a novated lease offers better overall value — especially with an eligible EV. But the right choice depends on your circumstances, and our finance team is happy to compare both options for your situation before you commit to anything.
What Vehicles Can I Get?
This one surprises people too — novated leases aren't just for white work utes or generic fleet sedans. You can lease essentially any passenger vehicle you'd want to drive.
At Maughan Thiem Fleet, we carry 10+ vehicle brands including a strong range of electric and hybrid vehicles. Whether you're after a practical family SUV, a sharp commuter hatch, a capable 4WD for weekend adventures, or a fully electric vehicle to take full advantage of the FBT exemption, we can source it for you. We're not just a fleet supplier — we're a full dealership group that's been part of South Australia since 1912, and our team knows our vehicles inside and out.
Used vehicles can also be considered for a novated lease — so if there's a specific model you've had your eye on, it's worth asking the question.
What Happens at the End of the Lease?
At the end of your lease term (typically two to five years), you'll have a residual value — sometimes called a balloon payment — which represents the remaining balance on the car. The ATO sets minimum residual percentages based on the lease term, and this figure forms the basis of your decision at the end.
You have four main options:
1. Buy the car outright. Pay the residual and the car is yours, free and clear. This payment comes from personal after-tax funds.
2. Trade it in and upgrade. If the car's market value has held up well — which it often does with popular models — it may be worth more than the residual. That difference is yours, tax-free. You can roll it into a new novated lease on your next vehicle.
3. Re-lease the car. Extend the arrangement for another term with the residual becoming the new base price. You keep the same car under the same tax-effective structure.
4. Return the vehicle. Depending on the specific lease structure you've chosen, returning the car may be an option to satisfy the balloon payment — though you'll want to understand the terms carefully before relying on this option.
Choosing a vehicle that holds its value well makes a real difference here. Our team can advise on models with strong resale track records from within our 10-brand range.
How Do I Get Started?
Easier than you'd think. Here's the simple version:
Step 1: Check with your employer. Confirm that your employer offers salary packaging and novated leasing as part of your remuneration package. Many private businesses, and virtually all South Australian government and local council employers, already have this set up. SA Government employees typically go through Smart Salary; local council employees often go through Maxxia.
Step 2: Contact Maughan Thiem Fleet. Reach out to our fleet team. Tell us what kind of car you're thinking about, your general situation, and we'll take it from there. We'll respond within two business hours.
Step 3: We handle the rest. Our in-house finance team coordinates directly with your employer's payroll or HR team and the leasing provider to get everything set up. We manage the documentation, organise the vehicle, and walk you through every step. You just pick the car.
Frequently Asked Questions
"I don't drive enough to make it worth it, do I?"This is one of the most common misconceptions. The savings in a novated lease — particularly the tax reduction and GST saving — are based on your salary and the vehicle's value, not how many kilometres you drive. Whether you're commuting 10 kilometres each way or 50, the pre-tax benefit is the same. Low-mileage drivers are not disadvantaged.
"Is this only worth it if I'm a high earner?"Not at all. While higher-income earners do see larger absolute savings because they're in a higher tax bracket, middle-income and standard-wage employees still benefit meaningfully — especially from the GST savings on the purchase price and running costs. And the EV FBT exemption delivers real savings to any salaried employee, regardless of income level.
"What happens if I get made redundant or resign?"Your lease doesn't disappear — it simply converts to a standard personal finance contract. You keep the car and continue making the same repayments from your own account. When you start a new job with a salary packaging-friendly employer, you can transfer the lease back into a pre-tax structure and restore your tax benefits.
"Is this the same as a company car?"Not quite. A company car is owned and maintained by your employer and provided to you as a benefit. A novated lease is a personal arrangement where you choose and keep your own car — the employer's involvement is limited to processing the payroll deductions. You're not driving a company car; you're driving your car, funded more tax-effectively.
"Is the EV FBT exemption permanent?"The federal government has introduced a phased transition for the exemption from 2027 onward. Leases established now are subject to the rules in place at the time they're executed, and existing leases before any policy changes are generally protected. We'd recommend checking the ATO's current guidance and speaking to our team about timing if this is a factor for you.
You Don't Need to Figure This Out Alone
Novated leasing has a bit of a reputation for being complicated. And honestly, the mechanics behind it — FBT calculations, residual values, pre- and post-tax splits — can get technical.
But that's exactly what our team is here for.
Maughan Thiem Fleet has been a 100% South Australian, family-owned business for over 112 years. We're not a call centre or a faceless finance platform — we're a real team of people based in Adelaide, Mt Barker and the Barossa, and we know this market inside out. Our in-house finance specialists handle all the complexity: the paperwork, the coordination with your employer and their payroll provider, the lender relationship, all of it.
Your job is simply to tell us what car you want.
Ready to Find Out What a Novated Lease Could Mean for You?
Curious what a novated lease could mean for your take-home pay?
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The information on this page is of a general nature only and has been prepared without considering your personal financial situation, objectives, or needs. Maughan Thiem Fleet does not provide financial, taxation, or legal advice. Any decision to enter into a novated lease should be made in consultation with your employer's salary packaging provider and, where appropriate, an independent financial or tax adviser. Income tax savings and GST concessions vary based on individual circumstances, applicable tax rates, and current ATO guidelines, which may change. Salary packaging and novated leasing services are subject to your employer's participation and the terms and conditions of their appointed salary packaging administrator (such as Smart Salary or Maxxia). All applications are subject to credit assessment and formal lender approval. Readers should verify all eligibility criteria, price thresholds, and FBT rules directly with the ATO or their salary packaging provider prior to entering any arrangement.