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What’s a novated lease?

A novated lease is a salary sacrificing arrangement between an employer, an employee and a financing company (like Westpac) to make regular payments for the purchase price of a car from the employee’s pre-tax salary.

How a Westpac novated lease works

Once the employee selects a car, they enter into an agreement with their employer and Westpac to have the lease payments deducted from their pre-tax salary.

Features and benefits of novated leasing 

To learn more, tell us which best describes you:


  • Potential savings

    • Making novated lease payments from your pre-tax salary reduces your taxable income
    • Save GST on the purchase price of a car when it’s bought from a registered dealer
  • Smoother cashflow

    Make small regular payments instead of a large cash outlay upfront when you buy a car

  • No minimum distance requirements

    Drive as little or as much as you want

  • Flexibility when the lease ends

    Refinance, choose to buy the car, return it to us or upgrade to another one


You must:

  • be aged 18 years or over
  • be a tax resident of Australia
  • have a regular permanent income
  • hold a current Australian driver licence or learner permit

Things to note

  • Speak to your employer to see if they offer novated leases and check with them to see if you’re eligible. 
  • Novated lease payments are paid from your pre-tax salary, which will reduce your take-home pay.
  • A novated lease is a type of benefit provided to employees, for which your employer may have to pay fringe benefit tax to the Australian Tax Office. Discuss the lease with your employer to understand how this could impact you and them.
  • If you leave your current employer, you may be able to transfer the novated lease to your new employer if they agree.
  • At the end of the lease term, you’ll need to make a lump sum payment (similar to a balloon payment) to cover the residual value of the car.
  • You should seek independent, professional tax advice to determine any tax impacts a novated lease arrangement may have on your circumstances.

Example: Potential tax savings

Billie receives a salary of $120,000 a year and wants to buy a new electric vehicle for $60,000. She discovers that there are extra savings in getting one via a novated lease compared to a car loan.

Under a Westpac novated lease arrangement, Billie could save $4,700 a year in income tax, an equivalent of $23,000 in savings over five years.

Thinking of getting a novated lease?

Learn about things you need to consider when deciding if it’s suitable for you.

Read more


  • Attract and retain talent

    Valued by employees looking to manage costs

  • No minimum business size

    Businesses of any size can offer novated leases

Things to note

  • As a business owner, you can apply for a novated lease if you’re paid as an employee. Otherwise, there are other business financing options you can explore.
  • If their employment ends, the employee takes over the lease payments, so there’s no ongoing commitment for you.
  • You should seek independent, professional tax advice to determine any tax impacts a novated lease arrangement may have on your business. 


To participate in a novated lease arrangement, your business must be based, registered and operating in Australia.

The details

Minimum borrowing amount $15,000
Interest rate Fixed interest rate calculated based on the age and residual value of the car, and the lease term. Contact us to find out more.
Frequency of lease payments Monthly
Minimum lease term 1 year
Maximum lease term 5 years
Vehicle type
  • Cars
  • New or used (dealer sales only)
  • 5 years old or less
Vehicle use Personal, business or both
Vehicle ownership during the lease term Westpac
Options when the lease ends
  • Buy the car from us
  • Trade in for a new one
  • Get a new lease
  • Return the car to us and pay us the residual value 
Fees & charges Equipment Finance fees and charges (PDF 117KB)

Ready to get started?

Here's what happens

The employee selects a car.

They contact us to discuss their leasing needs.

We’ll prepare a lease agreement and novated lease for the employer and employee to sign.

Once we've paid the supplier, the employee picks up the car and the employer starts deducting payments from the employee's salary.

Things you should know

Eligibility, credit criteria, fees, charges, terms and conditions apply.   

This is a general overview and should be used as a guide only. We recommend that you seek independent professional advice about your specific circumstances before acting. 

The taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice. It is based on current taxation laws and may be subject to change. You  should seek independent, professional tax advice to determine tax impacts relevant to your circumstances.