Program objectives
Our data-matching programs help us fulfil our responsibility to protect public revenue and maintain community confidence in the integrity of the tax and super systems.
The objectives of the novated leases data-matching program are to:
- promote voluntary compliance and increase community confidence in the integrity of the tax and super systems
- help ensure that individuals and businesses are fulfilling their tax and super obligations
- help ensure that individuals are correctly reporting motor vehicle deductions within their income tax returns
- identify and educate those individuals and businesses who may be failing to meet their lodgment obligations
- gain insights to help develop and implement strategies to improve voluntary compliance; this may include educational, behavioural or compliance activities for individuals and businesses with novated lease arrangements.
Why we look at this data
A novated lease is a three-way agreement between an employer, employee and a novated lease provider where the employer takes on the obligation for repayments under the lease and a corresponding deduction is made from the employee salary. Although the vehicle is privately owned by the employee it is treated as if it were a company vehicle.
The novated leases data-matching program will allow us to identify and address several taxation risks, including:
- incorrect motor vehicle expense claims - if an employee with a vehicle provided through a novated lease arrangement incorrectly claims motor vehicle related deductions
- incorrect claiming of goods and services tax (GST) credits - the employer claims GST credits for paying the GST on the purchase of the vehicle
- fringe benefits tax (FBT) compliance - a vehicle provided by novated lease is considered a fringe benefit to an employee and gives rise to an FBT liability for the employer. This liability can be reduced if the employee is making post-tax contributions.
More information on the tax treatment of vehicles with a novated lease arrangement: