A State of Emergency has been declared in Victoria due to the serious risk to public health posed by coronavirus (COVID-19).


Novated leasing

Victorian Government public servants may lease motor vehicles via a novated lease facility as part of the terms and conditions of the Victorian Public Service Enterprise Agreement 2016.

The Department of Treasury and Finance does not manage novated lease arrangements for government employees. All enquiries regarding novated leasing should be directed to the Human Resources or Payroll area within your department or agency.

Types of vehicle you can lease

Employees can select any vehicle valued below the luxury car tax (LCT) threshold (refer to the ATO website for luxury car tax rates and thresholds). The LCT amount is reviewed annually by the Australian Tax Office (ATO). In general, the value of a car includes the value of any parts, accessories or attachments supplied with the car or imported at the same time as the car.

Accessing government vehicle contract rates

Novated lease vehicles are strictly for private use, so the government discount rate does not apply.

How novated leases work

A novated lease allows employees to lease a personal motor vehicle using pre-tax salary deductions. The employee sacrifices a portion of their salary to cover the cost of the finance and running costs. A novated lease is a tri-party agreement with the employee, employer and the lease provider. The employer makes fortnightly lease payments through the payroll to the lease provider on behalf of the employee. The arrangement gives the employee private use of the vehicle. Some agreements provide employees with the option to purchase the vehicle at the end of the lease. This facility is not available to casual staff.

Lease payments while you’re on leave

The cost of the lease always remains the responsibility of the lessee, no matter what occurs to the employment status or employment arrangements. Where the lessee takes unpaid leave, long service leave, recreation leave, maternity leave, sick leave, changes their employment or where their employment is terminated, the lessee is required to continue to meet the costs of the lease payments. In the case of an employee taking unpaid leave, the lease payments must be met from their own funds, and will not be part of the salary sacrifice arrangement for that period. The lessee is also required to continue to cover lease payments if a vehicle is stolen or becomes unusable until settlement of any insurance claim, and meet any outstanding amount not covered by the settlement.

Novate leasing a car you’ve already purchased

You can contact your HR manager or approved lease provider to discuss a sale and lease back on the car you are driving now. They will advise you how this can be done, which will help you decide if it will be in your best interests.

Employees transferring into the VPS

Employees new to the public service may transfer an existing lease from the previous employer into the VPS novated vehicle leasing facility, provided the value is below the luxury car tax threshold. The vehicle would have to satisfy the age and other requirements specified by the leasing company. The incoming employee must make application through their HR department to seek approval.

Reviewed 16/05/2018
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