It’s complicated, but here’s the short version.
1. You lease a car from a finance company (and if you use a novated leasing company they’ll probably get a better price on purchase than you’ll ever get on your own)
2. You forecast all of the running costs of the car over the term of the lease (say three years). That includes finance payments, insurance, fuel, servicing, tyres – the works.
3. Then you spread all of these costs evenly over the three years, so you know exactly what your car is going to cost you, every single month.
4. Now you get your employer to pay for all of this, and they recover the money from your salary.
5. Finally, and this is the good bit – your employer now recovers as much of the money as possible, from your salary before income tax is applied – so your income tax reduces. And because your employer is GST registered, they claim the GST back from the ATO, generously passing the savings on to you.
And that’s it!
Almost every single time, it’s the cheapest way to own a car.