Buying a Car - Novated Leases for Expats

Using a novated lease to buy a car in Australia

There are very few places in Australia where you can "survive", particularly as a family, without a car. Unfortunately, they are an expensive necessity, and we find most Australian expats, migrants and temporary residents either buy a new or used car within weeks of arriving in Australia. Some arrange for the car to be available at the airport on their arrival!

Using a novated lease in this situation previously enabled you to acquire a car in both cost and tax effectively - allowing you to have a car available immediately on arrival -  but tax changes in July 2013 have undermined the value of the approach. Providers could use their buying power to obtain vehicles at a lower cost than would otherwise be available, and under the leasing arrangement an employer was able to deduct vehicle financing and running costs from an employee’s pre-tax income. This reduced their overall taxable income and the amount of income tax you paid.

The involvement of the employer means that they must support this arrangement - which is not normally a problem in Australia. Indeed, employers may have contracts with specific car leasing companies.

At the present time perhaps the most costy and time effective way of purchasing a car - both new or secondhand - for immediate use on arrival is to use a car broker.  There should be no cost in using this approach - they are paid referrals by dealers - but you need to ensure you are dealing with reputable firms.