The three-party agreement

You choose the vehicle, apply for finance through a novated lease provider, sign the lease agreement and novation deed, and use the car. You are responsible for the residual (balloon) payment at lease end and for continuing payments if employment ends.

• Select vehicle and negotiate price with dealer
• Apply for finance pre-approval
• Sign lease agreement and deed of novation
• Pay residual at lease end to take ownership

Your employer agrees to salary packaging, deducts lease payments from your salary each pay cycle (pre-tax and post-tax components), remits payments to the financier, and manages FBT reporting including Reportable Fringe Benefits Amount (RFBA) on your payment summary.

The employer does not own the vehicle and typically has minimal administrative burden — most providers handle payroll integration.

The finance company purchases the vehicle, holds legal title during the lease, receives payments from your employer, claims GST input tax credits, and manages the lease contract including end-of-lease settlement.

The novation deed is the legal document that transfers your obligation to make lease payments to your employer for as long as you remain employed there. If you resign, are made redundant, or your employment ends for any reason, the novation terminates and the full lease obligation reverts to you personally.

You can transfer the lease to a new employer if they agree to salary packaging, continue paying personally, refinance, or sell the vehicle to cover the outstanding balance.