Novated Lease: Drive your Cupra now

A novated lease allows you to use money from your salary before tax is taken out. This money is used not only for your vehicle’s repayments, but also general running costs, including petrol or charging, registration, insurance and servicing. You’ve got these big expenses pre-budgeted for, while potentially reducing your taxable income. 

Owning a car outright or using a traditional car loan means your payments and/or general running costs are all made with post-tax dollars. 

The Electric Car Discount is an initiative from the Federal Government to help make EVs more affordable by exempting eligible cars from Fringe Benefits Tax. 

To take advantage of the benefit, your novated lease vehicle needs to be: 

• Fully electric or a plug-in hybrid*

• Priced under the Luxury Car Tax threshold 

• A new car 

• Held First held and used on or after 1 July 2022 

• Has zero or low emissions

Oly can help you get set up with the discount and FBT exemptions if you take out a novated lease on an eligible EV. 

*From 1 April 2025, a plug-in hybrid electric vehicle will not be considered a zero or low emissions vehicle under FBT law. However, your employer can continue to apply the exemption if both the following requirements are met: 1) Use of the plug-in hybrid electric vehicle was exempt before 1 April 2025. 2) You have a financially binding commitment to continue using the vehicle for private use on and after 1 April 2025. For this purpose, any optional extension of the agreement is not considered binding. 

To qualify for the EV discount, plug-in hybrid electric vehicles must be delivered by midnight on 31 March 2025. Due to high demand and stock limitations there may be some vehicles that do not meet the delivery deadline for the EV Discount. Customers are advised to confirm delivery timelines before proceeding with their order.

FBT stands for Fringe Benefits Tax, which is a tax applied to benefits you receive through your employer that aren’t a salary. A novated lease is considered a fringe benefit.  

Because novated leases incur FBT, it is recommended to make post-tax contributions to offset the FBT liability. This is known as ECM, or the employee contribution method, because the employee (you) is the one making the contributions. 

If you have an eligible electric vehicle, your lease could be exempt from FBT requiring no post tax contribution, thanks to the Electric Car Discount.

Yes, you can claim electricity for charging an EV – both at home or at a public charging station. However, only one of these methods can be claimed per Fringe Benefits Tax year (which goes from 1 April – 31 March). 

Currently, the installation and cost of home charging station cannot be claimed under a novated lease agreement.

The good news about novated leases is that they could move with you if you change employers. Even though your employer manages your lease payments via your salary, the lease is in your name. 

If you change jobs during your lease term, speak to your new employer about transferring the lease to your new organisation. 

Alternatively, you could choose to buy your car outright by paying the residual value or keep making payments with post-tax dollars. 

There are four options at the end of your lease: 

• Take out a new lease on a new car. 

• Extend your current lease on your current car. 

• Buy your current car outright by paying the residual value. 

• Return your current car and pay any residual owing once the vehicle is sold. 

With a car loan, you’d be making repayments with your post-tax salary. With a novated lease, your payment uses some of your pre-tax salary, which could lower your taxable income. 

Your novated lease payments include your car finance along with registration, compulsory third party insurance (CTP), comprehensive insurance, charging/fuel, maintenance and tyres. 

We’ll discuss everything and allocate a tailored monthly budget. The best part is, your budget can be carried over to the next month, or paid out with your salary.

Yes, you can salary package electricity costs within your EV lease. You must be able to demonstrate specifically how much energy – and the cost of the energy – is going towards charging your EV. This can be either obtained through a separate smart meter installed in your home, or by purchasing a fast, in-home charger with the metering included within it. 

If it’s included in the cost of the car, then the cable charger will be bundled neatly into your novated lease payment. Unfortunately, the current ATO rules don’t allow in-home wall box chargers or third-party chargers bought separately to be bundled into a novated lease. 

A lot of public chargers, like those at shopping centres, are free to use. For the ones that require a payment, just keep the receipts and claim them through your budgeted account. 

At the end of your lease there are three options available to you: 

1. Upgrade to a new car, which means you take out a new novated lease or other finance loan type that suits your needs. All you need to do is trade in your current vehicle and pay any amount owing. 

2. Extend your lease by refinancing the residual amount (the balloon payment you owe at the end of your lease) and keep making regular payments. 

3. Keep your car, buy your current car outright by paying the residual amount.

A residual value is the value of the car at the end of the lease term. The residual value is agreed when you take out a novated lease and is used to calculate the monthly lease payment. This value is incorporated into your novated finance lease. All novated leases require you to pay a residual (aka ‘balloon’) GST inclusive amount when the lease ends. 

If you change jobs, you simply take the car with you and continue to make the car finance repayments directly or transfer your novation agreement to your new employer. If you or your new employer choose not to have the novation agreement transferred to your new employer, the finance payments will be for the car only and will need to be made from your post-tax salary and you will not have the option to bundle running costs into your payment.

There are no setup or ongoing costs for you, the employer. The lease is fully employee-funded.

Novated leasing is not limited to large corporations. Whatever the size of your business, you can offer this benefit to any of your employees who receive a regular salary.

The process is straightforward, and CUPRA Financial Services manages the administration, minimising work for your HR and payroll teams.

Your employee is responsible for the payments, but the employer facilitates the payments through payroll deductions.

Employers can claim input tax credits on lease payments, further reducing costs. CUPRA Financial Services will provide you with an input-tax-credit (ITC) report. 

CUPRA Financial Services use the Employee Contribution Method (ECM) for novated leases. This is where a portion of the lease cost is deducted as an ‘employee contribution’ from your employee’s post-tax salary – effectively eliminating the fringe benefits tax (FBT) obligation. At the end of the tax year, we’ll send you a report with the total taxable value of your employee’s benefits and all the information you need for the Australian Tax Office.

Yes, there are tax incentives and exemptions for eligible low-emission vehicles in certain circumstances. CUPRA Financial Services can advise on current incentives and benefits.

Employees can take the lease with them to a new employer or arrange to make personal payments. Our transition support ensures a smooth handover.

Employees have the option to refinance, purchase the car, or trade it in for a new car and a new lease.

No, the lease is the employee’s responsibility, and they take it with them if they leave.

Yes, CUPRA Financial Services provides comprehensive support for payroll deductions, tax reporting and compliance.

Employees must make alternative payment arrangements during unpaid leave. We help the employee transition to personal payments.