Toyota novated leasing

Novated leasing could be the opportunity for you to drive away with a new Toyota and save on tax.

Key takeaways

  • With a novated lease you can use your pre-tax salary to drive a Toyota and pay less income tax.
  • The novated lease is attached to the employee, so if they leave they take the lease with them without risk to the business.
  • Once your novated lease comes to an end you can choose to start a new lease or buy the car outright.

What is novated leasing?

A novated lease is where you sacrifice a portion of your salary to make payments towards leasing a vehicle.

Crucially, those payments come from your pre-tax salary. This means you end up paying less tax!

The novated leasing agreement is between the employee, your employer and a third party leasing company. Your employer agrees to pay for the leasing costs directly and they recoup the costs from your salary.

Depending on the type of novated lease arrangement you have, your payments might also include the costs of running and maintaining the vehicle.

When you compare the costs of buying and running a vehicle with your post-tax income, paying through a novated lease and reducing your tax tends to be the more cost-effective solution.

Can I use a novated lease to drive a Toyota?

Yes, you can use a novated lease to drive a Toyota. It might depend on the availability of the lease provider you are using however.

You may also be able to lease a Toyota electric vehicle. This provides additional tax benefits to the employer, as EVs are exempt from Fringe Benefits Tax (FBT).

What are the benefits of novated leasing a Toyota?

For the employee

  • Less pressure on the wallet. If you're worried about the cost of paying for a car upfront or taking out a loan, this is a cost-effective option. You may also benefit from corporate fleet discount programs that can reduce the retail price of a vehicle.
  • Tax benefits. With lease repayments coming from your pre-tax salary, you pay less income tax.
  • Easy loan management. With the payments coming out of your salary before you even see it, you don't have to worry about managing the costs yourself.
  • After-lease sale benefits. If you own the car at the end of the lease and decide to sell it, any profit from the sale will be tax-free.
  • No usage restrictions. There are no limitations on the way you use the vehicle. You can use it for business or personal use as much as you like.

For the employer

  • A way to offer incentives. A novated lease is a good way to incentivise employees with little expense to your business.
  • Limited risk. You won't be responsible for the vehicle if your employee leaves before the lease is up.
  • Not attached to the business. Novated leases are not considered an asset or liability of the business.
  • You don't need to arrange a company fleet. Novated leases are a way for your employees to access discounted vehicle leasing through your company without having to manage a company fleet.
  • Benefits for electric vehicles. Electric vehicles and their associated costs are exempt from fringe benefits tax (FBT)! They also have a higher luxury tax threshold.

What Toyotas can I lease?

Depending on the novated lease partner you go with, you can choose from a range of Toyota vehicles, including:

  • Toyota Corolla
  • Toyota Corolla Cross
  • Toyota GR Corolla
  • Toyota HiLux
  • Toyota Kluger
  • Toyota Yaris
  • Toyota Yaris Cross
  • Toyota Landcruiser
  • Toyota Landcruiser Prado
  • Toyota Rav4
  • Toyota Hilux
  • Toyota Camry
  • Toyota GR86
  • Toyota GR Yaris
  • Toyota GR Supra
  • Toyota Fortuner
  • Toyota Landcruiser 70 Series
  • Toyota C-HR
  • Toyota BZ4X

How can I lease a Toyota?

Several businesses in Australia offer novated leasing. If you are salary sacrificing through your employer you should ask them first if they have a preferred novated lease provider or existing agreement.

You also have the option of the employer going to Toyota directly.

When you choose your vehicle to lease you will also have the option of deciding between a non-maintained novated lease and a fully maintained novated lease.

Can I keep my Toyota at the end of my novated lease

You usually get the option to buy your vehicle at the end of your novated lease with a balloon payment. You can then decide whether you want to keep the car or sell the car.

Alternatively, you can end your existing lease to start a new lease with a new vehicle.

Buying the car at the end of your novated lease is usually only worth it if you're going to be in a position where you can no longer lease (e.g. changing jobs, retiring, your company no longer offers this).

If you are going to remain employed your best option will usually be to start a new lease, because it's the most cost-effective way of owning a car.

Check our complete guide on what to do once your novated lease has ended.

Frequently asked questions about Toyota novated leasing

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Senior Money Writer

Rebecca Pike is Finder’s senior money writer, with over 10 years of experience in mortgages and personal finance. A frequent TV and radio commentator, she frequently appears on Sunrise, A Current Affair, 9News, and Sky News, and contributes expert analysis to publications like Yahoo Finance and The Latch. Rebecca previously served as Editor of Mortgage Professional Australia. She has a Master’s degree in Journalism as well as ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products, which comply with ASIC guidelines. See full bio

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Rebecca has written 228 Finder guides across topics including:
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