Who is Salary Packaging and Novated Leasing?
Salary Packaging and Novated Leasing is an employee remuneration arrangement that lets staff direct part of their pre-tax salary toward benefits such as vehicle leasing, under a three-party contract among the employee, the employer, and the lessor.
- Salary packaging administration for pre-tax employee benefit arrangements
- Novated vehicle lease structuring under a three-party agreement
- Fringe benefits tax compliance and reporting support
- Payroll integration for salary sacrifice deductions
- Employer and employee benefits management services
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More About Salary Packaging and Novated Leasing
In enterprise environments, salary packaging is typically offered as an employee benefit program administered alongside payroll and human resources systems. Employers make these arrangements available so that staff can direct a portion of gross remuneration toward approved expenses, with the structure designed to reduce taxable income within the rules of the applicable tax regime. Novated leasing is one of the most common components of these programs, in which the employer and employee agree that lease payments are deducted from pre-tax salary while the vehicle remains in the employee's possession.
The operational model depends on several interlinked components. A novated lease involves an employee, an employer, and a finance provider, which together form a three-party contract. Administration platforms typically connect with payroll systems to calculate pre-tax deductions, track fringe benefits tax liability, and generate periodic reporting. Integration with human resources information systems and employee self-service portals supports enrolment, quotation, and lifecycle changes such as vehicle replacement or employment termination.
The significance of these offerings for organizations centers on workforce compensation design and regulatory compliance. Salary packaging can form part of a total reward strategy, and administrators must manage fringe benefits tax obligations, record keeping, and changes in tax rules. Because the arrangements carry financial and tax consequences for both parties, governance controls, accurate data exchange between payroll and the leasing provider, and clear employee disclosure are relevant considerations.
When compared with conventional vehicle financing or directly employer-provided vehicles, novated leasing differs mainly in how the cost is funded and how the vehicle is held. Under a novated arrangement, the lease transfers from the employer to the employee on termination of the lease, which distinguishes it from a standard corporate fleet model. Comparisons with other employee benefit categories, such as flexible benefits platforms or reimbursement schemes, depend on the degree of tax treatment and the level of employer involvement required.
The current solution areas associated with this organization center on employee benefit administration, vehicle leasing structures, and compliance support for salary-linked arrangements. Descriptions of product scope remain at the category level to reflect the general nature of these services.
Our description of Salary Packaging and Novated Leasing. Updated October 2026.
