Are electric vehicles and plug-in hybrids treated differently under a novated lease?
Yes, the primary difference lies in their tax treatment. While the novated lease process is identical for both, Plug-in Hybrid Electric Vehicles (PHEVs) are no longer exempt from Fringe Benefits Tax (FBT) as of April 2025.
FBT Savings: Battery Electric Vehicles (BEVs) remain FBT-exempt for eligible models under the Luxury Car Tax threshold, offering significantly higher tax savings than PHEVs.
GST Savings: You do not pay GST on the purchase price of either a BEV or a PHEV when bundled into a novated lease.
Running Costs: Both vehicle types allow you to pay for charging, fuel, and maintenance using pre-tax salary.
Can you walk me through what a ‘residual value’ is on a novated lease?
The residual value is the final payment required to own the vehicle outright at the end of your lease term. It is a mandatory amount set by Australian Taxation Office (ATO) guidelines based on the lease duration.
Not a Penalty: Contrary to common belief, the residual value is not a fee for exiting early; it is the “balloon payment” that remains after your monthly tax-effective repayments.
Early Termination: If you choose to end your lease early, the payout figure will typically consist of the remaining principal and the residual value.
Market Value: If your car is worth more than the residual value at the end of the lease, you can sell it, pay off the residual, and keep the tax-free profit.
ATO Minimum Residual Value Guidelines (on Cars)
The following percentages are based on the cost of the car (including GST) and apply to the majority of novated leases:
- 1 Year: 65.63%
- 2 Years: 56.25%
- 3 Years: 46.88%
- 4 Years: 37.50%
- 5 Years: 28.13%
How do I compare a novated lease quote that includes a maintenance package?
You should compare quotes based on transparency rather than just the total figure. A competitive maintenance package should clearly itemize what is included to ensure you aren’t paying for “hidden” margin.
Itemized Clarity: Look for a clear distinction between registration, scheduled servicing, tyres, and comprehensive insurance.
Flexibility: WhipSmart allows you to customize which running costs you include, ensuring you only package what you actually need.
Entity Value: By viewing maintenance as a separate line item, you can accurately compare it against retail prices to see the true “fleet discount” value.
How do I tell if the interest rate on a novated lease offer is competitive?
In the 2026 market, a competitive effective interest rate typically sits between 8% and 12% per annum. However, a “fully maintained” lease with a slightly higher rate can often be cheaper overall if it includes significant fleet discounts and lower management fees.
Effective vs. Comparison Rate: Always look for the Effective Interest Rate, which reflects the true cost of the money borrowed, and the Comparison Rate, which includes upfront and ongoing fees.
Watch for “Decoy” Rates: Low headline rates are sometimes offset by high monthly admin fees (ranging from $29–$50). A competitive offer balances the rate with low fees.
The Tax Advantage: Because repayments are made with pre-tax dollars, a 10% lease rate can often outperform a 0% traditional car loan for high-income earners.
Can I order a brand-new car and how does the ordering process work?
Yes, you can order any brand-new vehicle, including popular EVs like the Tesla Model Y, BYD Sealion 7, or Cadillac Lyriq. WhipSmart manages the entire procurement process for you.
Approval: We typically provide approval within one week of your personalized quote.
Sourcing: We utilize our expansive national dealer network and fleet discounts to secure the best possible purchase price.
Securing the Order: We secure your vehicle with a small deposit (typically between $500 and $1,000).
Onboarding: Once you complete the final paperwork, our onboarding team kicks in to manage the delivery and salary sacrifice setup.
