Why novated leases are an essential perk for small businesses

In Australia, we love a good work perk. You know, an allowance to schmick up your home office. Extra days of annual leave. Business trips that give you the chance to explore new parts of Australia and the world.

But there’s another. And this one’s all about movement. And it’s one that many employed by small- or medium-sized Australian businesses are missing out on. It’s called novated leasing. Basically, it’s a clever form of salary sacrificing where you get a new car while potentially saving money by paying less tax.

Key takeaways

Traditionally, novated leases have generally been something offered by big charities, businesses or government organisations.

At least, until Oly came and changed the game. Now, novated leases are widely used by Australian small businesses.

Oly’s here to introduce you to the wonders of novated leasing. How? By bringing choice to businesses that traditionally haven’t considered novated leasing. And while we think that novated leasing is the best choice out there, it’s also true that we’re a little biased. Okay, very biased. But also, fair. Which is why we’re here to run through all the options that employees and businesses have when it comes to getting a new car.

Business car loan

If you’re a small business...

What are the perks of leasing vs buying a car for Australian small businesses? A business loan is a loan given to a business (but really, did you need us to tell you that?) for the purchase of equipment related to work. Car loans for businesses can be an excellent option if you’re an Australian business owner looking at a set of wheels – or a whole fleet – for moving around. There are plenty of lenders out there. Which means things like term loans, interest rates and rate of repayments for a commercial car loan are all things that can be negotiated to your advantage.

Now, as for the financial side…

If you opt for a company car loan, you might be able to deduct interest paid on the loan to the extent that the vehicle’s used for official business. You also might be able help your business financially through asset write-offs and deductions available to eligible businesses.

Which is great for you, but is it really going to help you retain your employees?

If you’re an employee...

Sounds obvious, but just because you’re driving a company car doesn’t mean you own it. It is auto finance for business, after all. It belongs to the company you work for – just like a laptop or any other tool that you might need to do your job. Sure, you don’t have to make repayments on an automotive business loan, but (unless your boss is exceedingly cool), you probably won’t be able to haul away the family for a month-long road trip around Australia in the company car. You also won’t be able to choose the car you’re driving around in. So even if travelling is important for your job, a commercial car loan doesn’t offer the same benefits that a novated lease does.

Hire purchase

If you’re a small business...

Want a new company car but don’t want to take out a business car loan? Might be worth checking out hire purchasing – also known as equipment finance – which you can basically think of as “rent to buy for businesses”. In this situation, a lender (like a bank) buys the asset that you want for your business – let’s say a new car. Your business then gets access to the car while making agreed-upon repayments.

The handy – and potentially money-saving – thing about business car finance is that you can score some handy discounts by claiming interest and depreciation. Hellllooo savings! For that reason alone, equipment financing might be a legit option for an Australian small business that needs its employees to be mobile.

If you’re an employee...

The saved funds that come from equipment finance is bonza for your boss…but is it really benefiting you? That’s probably the biggest mark against hire purchasing for the average worker.

While there’s always an element of excitement that comes from driving a shiny set of wheels that you’re not financially tied to, that’s where the benefits end. If you’re driving a company car, you don’t have the choice on make, model, paint colour or any of that other fun stuff.

As with a car loan, an employee isn’t really benefiting from company vehicle finance. That’s why it might pay to convince your employer to offer novated leasing – you get the car you want, with the potential for some sweet tax savings.

Novated leasing

If you’re a small business...

Here’s something every business owner across Australia is all too aware of: it’s competitive out there. And if you want to attract and retain the cleverest cookies in your industry, you’ve got to be able to amp up the perks. That’s what a novated lease can do for small-business employees – you’re helping them make the most of their salaries at little effort to you.

You won’t be left in the lurch and liable for the novated lease if one of your employees leaves for another job. The novated lease will either become a traditional finance loan for the employee, or, if their new workplace offers novated leases, they can get it transferred over – no stress or expenses for you to worry about.

Since they have their own car – and not one you’re expected to maintain within your own fleet of vehicles or do any other upkeep on or admin for – it’s also a whole lot less stress for you.

If you’re an employee...

Your dream car made possible thanks to potential tax savings. Now’s that’s a deal worth taking notice of.

And make no mistake: this is your car to drive all over Australia, not the company’s. And that’s the big difference between a company loan, equipment finance and a novated lease.

A quick rundown on how novated leasing works in Australia. Basically, your employer takes out money from both your pre-tax and post-tax salary to pay for the car. (For eligible electric vehicles, payments are made entirely with pre-tax dollars.) With cash taken from your pre-tax salary, your taxable income is decreased. Which means that you could pay less to the taxman.

Plus you could skip upfront GST on cars valued up to $69,674 (for FY25–26). For cars with a driveaway price of over $69,674, you would be responsible for any upfront GST over that amount. Less up-front GST in some situations and a shiny new set of wheels? Sounds pretty good to us.

Even better, it’s a single payment that accounts for other eligible expenses around car ownership. Which means stuff like fuel, insurance and rego is all taken care of.

Now that’s a deal worth taking notice of.

Get started novated leasing with Oly

The heart of any half-decent business is its team. And scoring them a car with an Oly novated lease is a great way to keep them happy.

Likewise, if you’re an employee who’s had their eye on a new car, novated leases help you get behind the wheel with potential tax savings. So it might be time to start buttering up your employer.

And Oly makes novated leases possible for Australian small business employees.

If you’d like to find out more about our offerings, you can check out our Novated Lease page. It’s where you can find out more about novated leases, look at a selection of the vehicles we offer and even check out our calculator to see what your potential repayments could look like.

Get a quote with Oly today.

Ready to drive?

You don’t need to work for a big company to get big benefits, but to be eligible for an Oly novated lease you do need to be:

- Employed full-time, part-time or self-employed

- Earning a set salary (AKA not unemployed, retired, or a ride share driver)

- Looking for a car for personal use

Fill out this form to kick things off, then check your inbox for a link to create your Oly login to apply online (hint: check your spam/junk folder).

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