How GST savings work on a novated lease purchase
Source: ATO
Because the finance company — not you — purchases the vehicle, GST on the purchase price can be claimed as an input tax credit, effectively reducing the cost by up to $6,334.
One of the most misunderstood benefits of a novated lease is the GST saving on the vehicle purchase price. Because the lease company (not you as an individual) buys the car, it can claim a GST input tax credit on the purchase.
This credit is passed through to you as a lower financed amount. For FY 2025–26, the maximum claimable GST credit is approximately $6,334, calculated on the FBT base value of the vehicle up to the claimable limit.
Running costs packaged through a fully maintained novated lease — fuel/charging, insurance, servicing, tyres, registration — can also be GST-free when your employer claims input tax credits and passes the saving on.
GST savings are separate from income tax savings via salary sacrifice. Together, they form the two pillars of novated lease value: purchase price reduction and ongoing tax-effective running costs.
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