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Description Novated Lease
Under
this arrangement an employee leases a motor vehicle from the financier
using a standard finance lease agreement. The employee then sub- leases
the vehicle to the employer under an operating Lease. A
“Novation” agreement is entered into between the employee,
employer and the Financier under which the employee’s obligation
to pay the lease rentals under the finance lease are transferred to the
employer for the term of the Novation agreement. Therefore the employer
pays the lease rentals direct to the financier.
The
transfer of benefit and deductions is allowable under tax ruling
IT2509, which specifically addresses Novated Leases. There is no
equivalent Hire Purchase facility.
