This might be Australia specific, I’m not sure.
In: 2
As you’re referring to the concept, it’s an Aussie thing.
“Novated” means the obligations of a contract have been moved to another party. The employee signs the lease but shunts the responsibilities to their employer so long as they are still employed there.
Essentially, the cost of leasing the car comes out of one’s salary, but it’s taken out before taxes are pulled from one’s paycheque.
Like, if you’re paid $5k a month, you’d pay, say, $1250 in income taxes. If the cost to lease the car is $1000, instead the amount of money you get paid is $4000, of which $1000 is pulled as income tax.
If you paid the lease from your post tax pay in the original example, you go from $3750 take home to $2750. But the novated lease means instead you take home $3000.
And should one change jobs, one can arrange for the novated lease to be novated to the new employer.
There’s a great Aussie YouTuber, John Cadogan, [who has](https://youtu.be/99LweGk6fvw) [a few videos](https://youtu.be/9DnnHWsl7E8) [about](https://youtu.be/wlzDXKOrx-0) [novated leases’](https://youtu.be/-ZLOK-QENU0) [advantages](https://youtu.be/0514H3MirgY) [and pitfalls.](https://youtu.be/Ubv9Nj1oltQ)
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