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Special cases and policy

Most novated lease discussions assume a fairly “standard” situation:

  • stable unchanged employment,
  • straightforward payroll,
  • no means-tested subsidies or obligation.

In reality, a large proportion of people considering novated leases do not fit that standard mould.

This section exists to cover the edge cases, policy interactions, and structural quirks that are material to outcomes, but are often poorly explained, inconsistently applied, or quietly omitted from novated lease marketing.

This matters: They can change outcomes by thousands to tens of thousands of dollars over the life of a lease.

Where novated leases interact with policy in non-obvious ways

Novated leasing sits at the intersection of several different policy regimes:

  • income tax and FBT,
  • family assistance and childcare subsidy,
  • HELP/HECS and Division 293,
  • superannuation guarantee rules,
  • public-sector and NFP salary packaging caps,
  • and evolving EV policy.

Each of these systems was designed independently, with different objectives. Novated leasing is effectively layered on top of them.

The result is that outcomes can differ substantially depending on:

  • who your employer is (private, hospital, NFP, FBT-exempt),
  • how payroll applies the rules (correctly, aggressively, or conservatively),
  • what benefits you already use (FBT caps, childcare subsidy, HELP),
  • and whether current policy settings remain in place for the duration of your lease.

What this section covers

The articles in this section focus on the most important non-obvious interactions:

  • Adjusted taxable income and childcare subsidy
    EV novated leases can reduce income tax while increasing adjusted taxable income, with flow-on effects to childcare subsidy, HELP repayments, child support, and Division 293. This includes the special (and often misunderstood) treatment for hospital and FBT-exempt employers.

  • FBT-exempt employers and double counting the cap
    For hospitals and NFPs, the $9,010 / $15,900 FBT exemption cap is often already fully utilised for living expenses. Packaging a car under the same cap does not automatically create new savings — and treating it as such leads to systematically overstated benefits.

  • Super guarantee and payroll risk
    Despite common assumptions, employers are not required to calculate super guarantee on pre-novated-lease salary. Most do — but some legally calculate SG on post-NL income. This page explains what the law actually says, with ATO citations.

  • NSW Health's Employer Share policy
    For some NSW Health employees (especially doctors and nurses), there is a blanket policy requiring staff to “share” their tax savings from all salary packaging arrangements, including novated leases. This substantially reduces the net benefit they can achieve.

  • EV FBT exemption review timing
    The EV FBT exemption is under formal review. While existing leases are likely to be grandfathered, lease structure (e.g. 5-year vs 1+1+1+1) determines how exposed you are to policy change risk.

The section concludes with a broader observation on the novated leasing industry as a whole:

  • Why novated leasing is poorly regulated
    Novated leases sit in a regulatory grey zone — neither a financial product nor a regulated credit product. This explains why disclosure is inconsistent, comparisons are opaque, and practices that would be unacceptable elsewhere persist here.

Why this section matters

Many people evaluate novated leases purely on:

  • fortnightly take-home pay, or
  • headline “tax saved”.

That approach works only if none of the above special cases apply.

If any of the following are true for you:

  • you work for a hospital, NFP, or public-sector employer,
  • you work for NSW Health and are affected by employer share policy,
  • you receive childcare subsidy or other family assistance,
  • you have HELP debt or are near Division 293 thresholds,
  • your employer uses a less common (but still legal) method of calculating super contributions,
  • or you are relying on FBT-exemption remaining in place,

then these “special cases” are important for your consideration.

This section is therefore best read before committing to a lease, not after discovering the consequences.

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