A novated lease may result in greater tax efficiency and convenience, especially when all running costs are bundled. A car allowance is simply additional income, which may be fully taxable and leave you to manage all car expenses independently.
A chattel mortgage is typically used by businesses or self-employed individuals that has genuine business use to purchase vehicles and claim GST credits, interest and depreciation. Novated leases are designed for employees, where the employer handles lease payments via your pre-tax income, potentially reducing your taxable income and increasing your take-home pay. A traditional car … Continued
A novated lease allows you to make payments from your pre-tax income, potentially reducing your taxable income and increasing your take-home pay. A traditional car loan is paid from post-tax income and does not include vehicle running costs.