
A novated car lease in Canada is a three-way agreement between an employer, an employee, and the finance company. This alternative type of lease has become extremely popular throughout the Canada in the recent years because of all of the benefits it offers to both employers and employees. If you would like to know about the many benefits of novated car leasing, you have come to the right place. Understand what these benefits are, how a novated lease works, and why employers are offering this outstanding benefit to their employees.
How Does This Alternative Form of Leasing Work?
This type of contract varies from the standard leasing contract. With this type of contract, the employee will choose their vehicle of choice from a finance company. When the vehicle is chosen, the financier will then novate the agreement to the employer. When the contract is novated to the employer, the employer is taking on the responsibility of ensures that the payments will be paid each month. To ensure the payments are made, the employer takes the payment directly out of their employee’s salary.
The Benefits to the Employer
You might wonder why an employer would offer this type of benefit when they are taking on more responsibility. One of the main reasons is because employees will stay with a company when they receive benefits. While this is a huge advantage for employee retention, there are other benefits as well. These include:
- no need to manage company cars that are owned by the company
- the car does not have to be added on the company’s financial statements
- tax deductions for payments that are made
- allows employers to claim the input tax credit
- employees pay for the lease as soon as they leave the job
The Benefits to the Employee
There are also many benefits to novated car leasing for the employee. Some of these benefits include:
- a tax savings because the payment is deducted from salary so it will reduce the income of the employee.
- employees can use the car for personal use
- freedom for the employee to choose any vehicle they want to lease
- no restrictions for personal use
- the vehicle can be purchased when the lease is over
- the payments can be transferred to the employee if the employee ever leaves the company

Most employees who are in a higher tax bracket can benefit from this type of alternative lease. The payments are paid with pre-tax dollars so you may be able to save a pretty penny on taxes.
Make sure you understand all of the benefits of novated car leasing regardless of if you are the employer or the employee. Increase your employee retention and reap the reward of tax benefits as an employer. Reduce the amount of money you pay in taxes if you are an employee. This is a win-win type of contract for all of the parties involved and should be your first choice if you are looking for a new car. Visit www.prosperion.com.au today!








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