Learning the benefits of novated leases for small business employers
Australia’s competitive labour market is continuing to motivate employers to actively seek out new ways to retain current employees while attracting new candidates. Novated leases are an employee perk that has seen significant growth in 2026.
A novated lease is a three-way agreement whereby an employer, employee and novated lease provider agree to a novated lease, a form of car finance. It enables employees to salary package a vehicle, with the lease payments and running costs (including fuel, servicing and insurance) paid from their pre-tax pay. When the lease ends, the employee can pay the balance to own the car or switch to a new car and only pay the difference.
Learn more about novated leases for businesses.
In recent years, Metro has commissioned studies of small-medium businesses (SMBs) and discovered continued growth in the use of novated leasing by companies to incentivise employees, while also providing them with the opportunity to utilise the latest in vehicle technology.
In 2026, that trend has grown even further, with novated leasing now becoming a staple employee benefit for more SMBs.
Why the surge?
The data from Metro’s earlier studies revealed at the time that small (11-50 employees) and large enterprises (more than 200 employees) are equally likely to believe that a novated lease would either assist in attracting new staff or retain current employees. This is followed by 82 per cent of medium-sized businesses and only 51 per cent of micro businesses.
Specifically, medium-sized businesses are most likely to believe that novated leasing would help with staff retention (chosen by 61 per cent), followed by 57 per cent of large businesses and 56 per cent of small businesses.
Benefits of novated lease for small business employers
Much like a novated lease for any other type of car, a novated lease for an EV will typically include all of the vehicle’s running costs in the monthly lease payments, including things like registration, insurance, maintenance, and even charging costs.
Benefits of novated lease for small business employers
The increase of novated leases over the past few years continues to rise with more companies predicted to offer employee perks and take advantage of government incentives into creating an economy and environment that fosters the growth of electric vehicles.
In its survey of 204 Australian business directors and decision-makers, the data revealed 70 per cent of businesses believe a novated lease would help staff retention alongside attracting new candidates, while only 30 per cent stated otherwise.
When looking at novated leasing, there are many benefits for business owners and employees to consider. Some of these benefits include:
01 /
From a business perspective novated leasing is practically cost neutral. Lease payments, which also include the vehicle’s running costs, are made from the employee’s salary before tax, rather than being an extra and sometime unexpected cost, like with a company car.
02 /
In a competitive job market, salary packaging is a great way for businesses to add a tangible benefit for employees while not impacting the bottom line.
Metro’s previous survey showed 44 per cent of businesses believe that a novated lease would help to retain some existing employees, while a quarter (26%) believe that a novated lease would help attract new candidates. In 2026, the expectation is that trend continued to grow.
03 /
Unlike a company fleet, the business usually doesn’t own the vehicle, meaning less regular paperwork, ongoing costs and liability over the asset. In the instance that an employee leaves the organisation, their novated lease goes with them.
Want to learn more about company fleets? A Metro commercial loan may be your best option.
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While there are plenty of tax savings to be had by employees when making lease payments from their pre-tax salary, businesses can also benefit.
In some states, payroll tax may be reduced as the taxable wage paid by the employer is lower once lease payments have been deducted.
To find out more about tax benefits in your state, talk to your taxation professional.
05 /
Across Metro’s finance product portfolio, interest in electric vehicles (EV) and plug-in hybrid vehicles (PHEV) has grown sharply in recent years.
Demographic trends show that EV adoption is most common among borrowers aged 25 to
44, who represent the core working demographic with stable incomes and higher eligibility
for novated leasing.
The FBT exemption introduced in July 2022 marked a turning point, unlocking widespread
access to electric vehicles through salary packaging. The subsequent policy change in April 2025, which removed the exemption for plug-in hybrid vehicles (PHEVs), revealed just how sensitive adoption remains to tax settings. Within a single quarter, PHEV demand fell by almost 94 percent, underscoring that government incentives continue to be one of the most powerful levers shaping consumer behaviour in the low-emission vehicle market.
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Tasmania
Tasmania is in between offering incentives for electric vehicle buyers.
Australian Capital Territory
New cars, motorcycles, utility and light commercial vehicles that are zero-emission are stamp duty exempt.
South Australia
South Australia is in between offering incentives for electric vehicle buyers.
Western Australia
This state is offering a $3,500 rebate for the first 10,000 buyers of new zero-emission vehicles with a dutiable worth of $70,000. Read the fine detail here.
Federally
Battery electric vehicles, plug-in electric vehicles don’t pay customs duties as long as they’re below the luxury car tax threshold.
- Zero or low tailpipe emission vehicles below the luxury car tax threshold are exempt from Fringe Benefits when financed under a novated lease. This places EVs more in reach of employees who wish to take out a novated lease.
Victoria
- Zero-emission vehicles don’t attract luxury vehicle stamp duty rates, rather they pay a flat rate of $8.40 of market value, but that is regardless of the purchase price paid.
- As well, zero and low-emission vehicles can get a $100 discount on annual vehicle registration, but this isn’t available for electric heavy vehicles nor electric motorcycles.
Northern Territory
- Up until 30 June 2027, a $1,500 stamp duty discount is on offer to those buying new or used electric vehicles, fuel-cell and plug-in hybrids. It’s limited to vehicles having a dutiable worth no more than $50,000.
- Over that time frame, new and existing battery-electric and plug-in hybrid electric vehicles will enjoy concessions on registration and stamp duty. This applies to cars imported from interstate or overseas, previously registered or modified electric vehicles.
- Businesses and homeowners are eligible for a $2,500 and $1,000 rebate respectively to purchase and install an electric vehicle charger.
Keep up-to-date on EV incentives in your state:
https://www.mynrma.com.au/open-road/advice-and-how-to/ev-incentives
In partnership with the Australian Government’s Clean Energy Finance Corporation (CEFC), Metro offers a range of finance products on green technologies such as electric vehicles and chargers, which provide discounted rates and flexible terms.
To find out more about novated leasing for electric vehicles, click here.
Benefits of Novated Lease for the Employee
Novated leases are becoming increasingly popular for employees because of their many cost savings and convenience features.
From reduced tax liabilities to being able to bundle all of the vehicles running costs into one regular payment, salary packaging continues to be a preferred method of getting behind the wheel of a new or used vehicle for employees over more costly traditional outright purchasing options.
These benefits are also worthwhile to employers who can offer novated leasing to attract new talent in their business and provide a tangible benefit to current employees.
1.
We’ve said it before, but it bears repeating: because novated lease payments are made from an employee’s salary before tax, it reduces their overall taxable income, saving them money.
This can also benefit employers in some states as the reduced taxable wage can also reduce payroll tax. Check with your taxation profession to find out how this might apply in your state.
2.
GST savings are another benefit of novated leasing, as the vehicle’s purchase price up to the luxury car threshold and its subsequent running costs (which are bundled in one regular lease payment) do not incur the usual additional 10 per cent for GST.
This means that costs like tyres, fuel and servicing along with the car itself are cheaper overall – netting more savings.
3.
Because the vehicle’s running costs are bundled into one convenient regular lease payment, employees who access a vehicle through a novated lease are able to manage their personal and household budgets with greater certainty, with no unexpected costs along the way.
Depending on the package offered by their employer, they may also be able to bundle multiple vehicles for immediate family members while still only making one regular payment.
4.
As the Australian Government continues to support motorists transition to greener mobility, the current FBT exemption on electric vehicles presents another huge saving for employees.
In addition to savings, many businesses are also using EV-based programs to support corporate social responsibility efforts within their business, boosting their business profile with customers and the wider community.
Why Small Businesses Specifically?
We know that time is money, especially when it comes to running a small business. That’s why novated leasing could be a huge benefit to SMBs, given the obvious costs savings and tangible perks they provide to employees while also ensuring low admin time and cost neutrality for businesses to implement.
It’s many ways it’s a win-win for both employee and employer; and increasingly is being used as a way to attract and retain top talent.
Partnering with Metro Finance
As we’ve covered, novated leases are fast becoming a leading option when it comes to vehicle finance for both employees looking to get into a new car, and employers wanting to look after their teams.
At Metro, we offer SMBs a range of tailored finance options to suit their needs, backed by a real team of humans based in Australia, and a national network of accredited Metro brokers.
So what are you waiting for? Start a conversation with us today and let us help you take advantage of the many benefits and convenience features of novated leasing.