For many Australians, novated leasing offers an accessible way to drive a new vehicle while enjoying potential cost benefits and simplified budgeting. But what if you’re self-employed or a sole trader — can you still access a novated lease?
The short answer is no — a novated lease is typically not available to those who are self-employed. This is because a novated lease is a three-way agreement involving an employee, their employer, and a finance provider. It allows the employee to lease a vehicle using pre-tax salary through salary packaging, with the employer handling lease payments on their behalf. For those without a traditional employer, this structure becomes unworkable under current Australian taxation and leasing arrangements.
Why It Doesn’t Apply to the Self-Employed
At its core, novated leasing relies on regular payroll deductions made by an employer. Self-employed individuals do not receive income through payroll and therefore cannot enter into this salary packaging arrangement in the same way a full-time employee can. The tax treatment of novated leases also depends on PAYG withholding and reporting, which are employer obligations.
While sole traders and small business owners may manage their business vehicles through other finance methods, novated leasing remains reserved for employees of registered businesses that are willing to facilitate the leasing agreement.
Alternative Vehicle Financing Options for the Self-Employed
Although a novated lease isn’t available to the self-employed, there are other viable vehicle finance solutions to explore:
- Car Loans/Chattel Mortgage: A straightforward way to purchase a vehicle outright with fixed repayments.
- Commercial Hire Purchase: Allows you to hire the vehicle with the option to purchase at the end of the term.
- Operating Leases: Similar to long-term rentals, these are available to businesses needing fleet flexibility.
- Business Vehicle Finance: Tailored solutions that may offer tax benefits and simplified repayments.
The right option will depend on your business structure, cash flow, and usage needs. Fingo offers resources to help you understand these options and work with providers that specialise in small business vehicle finance.
Key Considerations for Self-Employed Drivers
While exploring vehicle finance options, self-employed individuals should keep the following in mind:
- Usage Transparency: Ensure the vehicle’s primary use aligns with your business needs, especially when claiming expenses.
- Tax Planning: Speak with an accountant or financial adviser before committing to any finance product to ensure you’re meeting ATO guidelines.
- Vehicle Choice: Choose a vehicle that suits both your personal and professional requirements to maximise its value.
How Fingo Supports Sole Traders and Business Owners
Although novated leasing may not be an option, Fingo understands the unique needs of self-employed Australians. Whether you’re running your own business or operating as a contractor, Fingo can connect you with expert support and tools to help you navigate car finance options that align with your goals.
Our team is here to help guide your car buying journey, from selecting the right vehicle to understanding your finance choices — always in clear, simple terms. While we are not a finance provider, we work with trusted partners to assist you every step of the way.
Final Thoughts
Novated leases remain an employee-focused benefit and are not currently accessible to self-employed individuals. However, that doesn’t mean you’re left without smart and flexible vehicle finance solutions. With the right guidance and support, sole traders and small business owners can still access competitive car finance options tailored to their circumstances.
If you’re self-employed and exploring your options, Fingo is here to help you take the next step with clarity and confidence.