Novated Leasing without Flare

Hi NathanSk​, I need to do it too. How did you sort it out?

I got instructions from MYOB team, when I called them. Would it help to solve a problem you had.

Option 2: Manual setup for a non-Flare provider

1. Obtain the lease schedule

Ask the lease provider for:

• Pre-tax amount per pay
• Post-tax employee contribution/ECM amount, if applicable
• Pay frequency
• Any luxury car charge or additional amount

The pre-tax and post-tax amounts must match the employee’s pay frequency.

2. Create a liability account

AccountRight:

1. Go to Accounts command centre.
2. Select Accounts List.
3. Select New.
4. Create an Other Current Liability account.
5. Name it something like Novated Lease Payable.
6. Save the account.

This account will hold the deductions until the financier is paid.

3. Create the pre-tax deduction

1. Go to Payroll command centre.
2. Select Payroll Categories.
3. Select Deductions.
4. Select New.
5. Name it Novated Lease – Pre-tax.
6. Set the calculation to Fixed amount per pay or User-entered amount.
7. Link it to the Novated Lease Payable liability account.
8. Set the ATO reporting category to Salary sacrifice – other employee benefits.
9. Open the Exemptions tab and select PAYG Withholding.
10. Save the deduction.

4. Create the post-tax ECM deduction

Only create this if the provider’s schedule includes a post-tax employee contribution.

1. Select Deductions > New.
2. Name it Novated Lease – Employee Contribution (ECM).
3. Set the calculation to Fixed amount per pay or User-entered amount.
4. Link it to the same liability account.
5. Set the ATO reporting category to Not reportable.
6. Do not select PAYG Withholding as an exemption.
7. Save the deduction.

5. Add the deductions to the employee

1. Go to Card File > Cards List.
2. Select Employees.
3. Open the employee.
4. Go to Payroll Details.
5. Open Deductions or Standard Pay.
6. Add the pre-tax deduction.
7. Add the post-tax ECM deduction, if applicable.
8. Enter the amounts provided by the lease provider.
9. Confirm the items are set up under Deductions, not Wages or Allowances.

6. Test the payroll

Run a test pay and confirm:

• The pre-tax amount reduces taxable income and PAYG withholding.
• The post-tax ECM amount reduces net pay.
• The pre-tax amount reports as Salary sacrifice – other employee benefits.
• The post-tax amount is not reported as salary sacrifice.
• Both amounts accumulate in the novated lease liability account.

7. Pay the financier

When paying the lease provider, record the payment against the Novated Lease Payable liability account so the deductions are cleared.

I've no idea if this is going to leave me in a sticky spot later, but I changed the liability account to GST applicable, and redid all the transactions and it seemed to work.

Anyone have any way to help with this? 

The silence is deafening

Hey NathanSk,

You've clearly put in the legwork already by searching on how to setup novated lease. I’m not confident on a non‑Flare setup here, so I’m hoping someone in the community who’s nailed this can jump in with their workflow that keeps ITC correct, keeps expenses accurate for BAS, and makes the ATO payment reconcile neatly without journals forcing GST.

Cheers,

Doreen