If you've been following along with our blog, you’re probably already familiar with the basics of a novated lease and it’s no surprise why! The perks are pretty hard to pass up—tax savings, a single payment that covers all your car expenses, and the freedom to use your car however you want. It’s the ideal mix of cost savings and convenience.

But here’s the kicker: there’s a lot more to a novated lease than meets the eye. Your monthly payment doesn’t just cover the car itself, it includes a whole lot more. Curious about what else you can claim? Let’s take a closer look at all the extra benefits you might be missing out on!

Novated Leases: A Quick Refresher

Let’s break it down: a novated lease is a three-way agreement between you, your employer, and a novated lease provider like carbar. You agree to sacrifice part of your pre-tax salary to cover your car and maintenance costs, and your employer handles the payments for you.

For anyone working with a company, a novated lease is a smart and affordable way to drive the car you want without breaking the bank. It’s quickly becoming a popular alternative to traditional car loans because it’s less of a financial burden. No hefty upfront costs, no putting your car up as collateral, and no high interest rates.

And it’s not just a trend. In 2022, 5% of Australia’s new car market was financed through novated leases, and that number keeps growing every year. It’s clear more people are discovering how much sense this option makes.

What You Can Claim

One of the best things about a novated lease is how much it covers. Instead of juggling multiple payments, you make one simple monthly payment deducted from your pre-tax income, and voila—all your car costs are taken care of. And when we say "all," we mean more than just the car itself. Everything you need to keep your car running smoothly is included. The best part? It bundles all your expenses into one easy invoice, which means way less paperwork for you.

Wondering what qualifies as “valid” car expenses? It’s more flexible than you might think. Here’s a look at the expenses you can claim under your novated lease:

Vehicle Payment: This is the main cost covered by your novated lease—your car’s financing. To make the most of the tax benefits, it’s worth considering the length and term of your lease.

Vehicle Registration: Your annual registration, including compulsory third-party (CTP) insurance, is covered.

Car Insurance: You can include your regular insurance payments in your novated lease. If you’re lucky enough to have some funds left over, you can even include your insurance excess if you need to make a claim.

Maintenance: Both scheduled servicing and essential repairs (like brakes and windshield wipers) are included, so your car stays in top shape.

Fuel: You can have your fuel costs factored in, either deducted directly from your pre-tax income or paid through a fuel card linked to your lease.

Tyre Replacement: Need new tyres? Your novated lease can cover it. The frequency depends on things like the car you drive, how you drive, and how much you’re on the road.

Auto Club Membership: If you’re already part of an auto club, you can include that cost in your novated lease, and even extend your membership when it’s up for renewal.

Shiny Trimmings: Want to keep your car looking fresh? Your novated lease can cover car washing, detailing, and even replacing parts like tail lights and mirrors if needed.

Can I Save on Cents per Kilometer?

You might be wondering if your Novated Lease affects your business travel expenses. The short answer is, not usually. Since your Novated Lease already covers most of your car-related costs, the Australian Taxation Office (ATO) doesn’t allow you to claim cents per kilometre for business trips.

But don’t worry, it’s not all set in stone. If your employer hasn’t fully reimbursed you for expenses incurred while driving your Novated leased vehicle for business, you may be able to claim the costs they missed.

There’s a catch, though. You’ll need to do some detailed record-keeping. To make a claim, you’ll need to track your business-related expenses and keep a logbook for at least 12 weeks.

So, is it worth the extra effort to get those cents per kilometre back, or would you rather enjoy the simplicity of your Novated Lease payments? That’s something only you can decide!

How to Claim the Expenses

Here’s the best part: for most of the expenses, you won’t have to lift a finger! Simply chat with your novated lease provider at the start to set up your car-related expenses, and those costs will be automatically deducted from your pre-tax income every month. It’s that easy—no hassle, no extra steps.

But if you find there’s an expense you haven’t included yet, don’t worry! You can pay for it yourself first, then submit a claim to your provider, and they’ll reimburse you in the next payment cycle. Or, if it’s easier, just send the unpaid bills to your novated lease provider, and they’ll handle the payment for you so long as you’ve got enough balance in your account.

Sounds pretty simple, right? If you’re curious about what a novated lease might look like for you, give carbar’s novated lease calculator a try to get an estimate.