• GST and vehicles purchased under novated leases

    Under a novated lease arrangement, you (the employer) take over all or part of the lessee's rights and obligations under the lease. This transfer of rights and obligations is agreed to in a deed of novation between you, the finance company and the lessee. The lessee is usually the employee, or an associate of the employee.

    The deed of novation usually contains a clause that transfers the lease obligations back to the lessee on termination of the lease or when the employee ceases employment with you. In the latter case, this enables the employee to enter into a new novated lease arrangement with another employer.

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    See also:

    • TR 1999/15External Link Income tax and fringe benefits tax: taxation consequences of certain motor vehicle lease novation arrangements.
      Last modified: 10 Apr 2017QC 16604