Businesses and Novated Leases: An SBLA Research

February 2024

70% of businesses
would offer employees
novated leases to
reduce their own
vehicle spend

A Small Business Loans Australia Study

About the study

Small Business Loans Australia commissioned a survey of 202 business directors and decision-makers across the full SME spectrum - micro (1-4 employees), small (5-19 employees) and medium-sized businesses (20-199 employees) - to gauge whether employers perceive novated leases as a cost-saving alternative to company cars.

Respondents were asked if they would offer, and motivate, their employees to take up a novated lease rather than have the company invest in cars.

The survey also asked respondents if they thought novated leases would be a successful move by the company to save costs on car purchases.

Would you encourage employees to opt for novated leases for work-related car use instead of providing company cars, as a cost-saving strategy?

Small Business Loans Australia revealed that 70 per cent of respondents would offer and motivate their employers to take up a novated lease, rather than the company purchase the cars, as a business cost-cutting measure.

A majority of respondents also believe the decision would be successful for the company, with 69 per cent of SME directors and decision-makers thinking their employees would love to salary-sacrifice a car purchase, with the ability to own it eventually, while saving on running costs because of the car running costs coming out of employees’ pre-tax earnings.

Would you encourage employees to opt for novated leases for work-related car use instead of providing company cars, as a cost-saving strategy?

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By State.

Across the states, West Australian, South Australian, and NSW businesses are most likely to offer and motivate their employees to take up novated leases, with 77 per cent of business owners stating so. This compares with 69 per cent of Victorian and 58 per cent of Queensland business owners and decision-makers that agree with them.

In comparison, 42 per cent of Queensland businesses are least likely to offer and motivate employees to take on a novated lease, regardless of the cost savings; this is followed by 31 per cent of Victorian, and an equal 23 per cent of NSW, South Australian and West Australian businesses.

Would you encourage employees to opt for novated leases for work-related car use instead of providing company cars, as a cost-saving strategy?

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By business size.

Small Business Loans Australia found that four in five (84%) large businesses are most likely to seek cost savings by offering and motivating their employees to take up novated leases. This compares with an equal 79 per cent of medium-sized and small businesses, and only 50 per cent of micro businesses who agreed.

Micro businesses are the least likely to offer novated leases, with 1 in 2 (50%) of their directors and decision-makers in the survey stating so, followed by:

  • 21% of small-sized businesses
  • 21% of medium-sized businesses
  • 16% of large businesses

Would you encourage employees to opt for novated leases for work-related car use instead of providing company cars, as a cost-saving strategy?

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Would your decision result in employees taking up novated leases?

Small Business Loans Australia found that 69 per cent of Australian businesses believe transitioning from company-owned cars to offering employees novated leases would succeed, given the appeal of personal and work use, coupled with ownership flexibility.

However, 31 per cent think the move to novated leases would be unsuccessful because employees would expect the company to provide them with a car if they need one to do their job.

Would your decision result in employees taking up novated leases?

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By State.

  • 76% of NSW respondents
  • 69% of Victorians
  • 59% of West Australians
  • 58% of Queenslanders

Queensland businesses are more sceptical about novated leases being taken up by employees, with 42 per cent stating that employees would expect the company to provide them with a car. A similar proportion (41%) of West Australian respondents felt the same – and this compares with only 31 per cent of Victorians, 24 per cent of NSW respondents and 23 per cent of South Australians.

Would your decision result in employees taking up novated leases?

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By business size.

Medium-sized businesses are most likely to believe the move to novated leases would be successful, at 82 per cent, compared with 78 per cent of large businesses, 62 per cent of micro-businesses and 54 per cent of small businesses.

Almost half (46%) of small businesses think employees would expect the company to provide them with a car. However, only 38 per cent of micro businesses, 22 per cent of large businesses, and 18 per cent of medium-sized businesses believe that the move to novated leases would be unsuccessful.

Would your decision result in employees taking up novated leases?

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