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Wombat203(Newbie)Newbie
29 Jan 2026

I have a personal novated lease (it's not a company vehicle or part of a salary package), it's salary sacrificed through my employment at an NGO. NGO has surrendered all fleet vehicles and is now requiring employees to use their personal vehicles for transporting clients, and work related travel.


At the time I contracted the lease it was for personal use (including insurance costs, kms, fuel etc). Costs for the lease were calculated at personal usage only. I am now paying $500+ a month in running costs for my personal vehicle for work use, and I was told by H&R block that I cannot deduct any of the wear and tear or running costs for my vehicle for work use even though they well exceed the costs deducted by my employer pre tax, and from my post tax salary.


So in effect I am now incurring significant wear and tear and running costs on the vehicle with zero compensation as there is a "pre-tax" deduction by my employer from which they benefit, as I am seeing no discernable financial advantage from owning or using the vehicle at this stage

154 views
1 replies
154 views
1 replies

All replies

NikkiATO(Community Moderator)Community Moderator
3 Feb 2026

Hi @Wombat203,


That’s right – you can’t claim running costs for a car that you use under a novated lease. For tax, a novated‑lease car is treated as an employer‑provided car, even if it’s your ‘personal’ vehicle and even if you pay some of the costs yourself. That means car expenses like fuel, servicing, tyres or decline in value can’t be claimed as deductions. These costs sit within the salary sacrifice arrangement.


You may be able to claim specific work‑related expenses that aren’t part of the car running costs (like parking and tolls directly related to work trips). These aren’t included in the novated lease arrangement.


If your work use has increased and your lease budget no longer covers your actual costs, it’s worth speaking with your leasing provider or employer about updating your novated lease budget. That’s an employer–lease issue, not something tax law can change.

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Lease Deductions for work use | ATO Community