You're a sparky, plumber, or chippie with your own ABN. You've heard salary packaging thrown around at barbecues by your mates who work for big companies. And every time you ask about it, someone says "that's only for employees."
They're wrong.
Sole traders and tradies running their own businesses have access to legitimate, ATO-compliant vehicle packaging arrangements that deliver almost identical tax savings to a standard novated lease. The structure is slightly different - but the result is the same. A late-model work ute, paid largely from pre-tax income, with running costs included.
This article explains exactly how it works, who it suits, and what the numbers actually look like.
Why Tradies Assume They Can't Access Salary Packaging
The confusion comes from how salary packaging is usually explained. Most guides describe it as a three-way arrangement between an employee, their employer, and a finance company. If you're a sole trader - you're neither employee nor employer in the traditional sense - so the assumption is that it doesn't apply.
But the ATO doesn't restrict these arrangements to people who work for someone else. What matters is the legal structure through which you operate and how your income is drawn. And for many tradies, there are legitimate ways to restructure that access the same tax advantages.
The key is understanding which structure you're operating under - and which arrangement suits it best.
Three Legal Ways Tradies Can Package a Vehicle Today
1. Set Up a Company and Pay Yourself a Salary
This is the most common approach and the most straightforward from an ATO perspective. Rather than operating as a sole trader drawing income directly, you establish a company structure, become an employee of that company, and pay yourself a salary.
Once you're drawing a formal salary, you can enter a novated lease arrangement exactly like any other employee. The lease payments and running costs are deducted from your pre-tax salary, your taxable income drops, and the GST on the vehicle and running costs is claimed by the business.
The switch to a company structure has implications beyond just vehicle packaging - including different tax rates, liability protections, and administrative requirements - so this is a decision worth making with your accountant rather than in isolation. But for tradies earning $100,000 or more, the combined tax benefits of company structure plus vehicle packaging frequently justify the change.
Vehicles that work best in this structure: Any dual-cab ute used primarily for work qualifies for the FBT commercial vehicle exemption, meaning your employer (your own company) pays little or no FBT. Popular choices include the Toyota HiLux, Ford Ranger, Isuzu D-Max, and Mitsubishi Triton - all FBT exempt under standard commercial use conditions.
2. Use a Trust Structure
If you're already operating through a discretionary or family trust - which many trade business owners are, often without fully understanding all the options it opens up - there are packaging arrangements that work within that structure.
A trust can employ you as a beneficiary drawing a salary, which again creates the employed-person relationship required for novated leasing. Alternatively, some arrangements work through distributing income in a way that reduces the effective tax rate on vehicle costs.
This is genuinely complex territory and the specifics vary significantly depending on how your trust deed is written, who the beneficiaries are, and how income is currently being distributed. The Employee Share Scheme provisions can interact with trust structures in ways that create additional planning opportunities, but these require proper advice to implement correctly.
The bottom line: if you're already in a trust, talk to your accountant specifically about vehicle packaging before assuming it's not available to you. Many tradies operating through trusts are missing significant tax opportunities simply because nobody has raised it with them.
3. Run a Fully Maintained Operating Lease Through the Business
This one isn't technically salary packaging - but it achieves a very similar after-tax result, and it's available to any ABN holder regardless of business structure.
An operating lease bundles the vehicle and all running costs - fuel, servicing, tyres, registration, insurance - into a single fixed monthly payment. That entire payment is a deductible business expense. GST is claimable upfront. And because the vehicle stays off your balance sheet, it doesn't affect your borrowing capacity.
For a sole trader who can't or doesn't want to change their business structure, a fully maintained operating lease through Fleet Leasing Australia achieves the same practical outcome as salary packaging: a late-model work vehicle with all costs covered, paid largely from pre-tax business income, with predictable monthly outgoings and no end-of-ownership headaches.
This is the arrangement most relevant to Fleet Leasing Australia's current clients - and for many tradies, it's actually simpler and more practical than a formal novated lease structure.
What the Numbers Actually Look Like
Here's a realistic scenario based on current tax rates and typical vehicle costs:
The tradie: A self-employed electrician earning $120,000 in business turnover, operating through a company structure.
The vehicle: A $72,000 dual-cab ute fully loaded - toolbox, canopy, bull bar - with all running costs (fuel, servicing, tyres, registration, insurance) bundled in.
The result over a 5-year lease term:
ā¢ Fortnightly impact on take-home pay: approximately $380ā$480
ā¢ Total tax and GST saved over 5 years: approximately $45,000ā$60,000
ā¢ Net outcome: driving a brand-new, well-equipped ute for less than most people would pay for a comparable used vehicle purchased after tax
The range in those figures reflects variables like your exact marginal tax rate, the specific vehicle chosen, interest rates at the time of agreement, and how running costs are structured. Your accountant can run the precise numbers for your situation.
What doesn't vary is the fundamental mechanic: pre-tax payments plus GST recovery plus FBT exemption on a qualifying commercial vehicle adds up to a very significant saving over the life of the lease.
The Setup Process - It's Less Painful Than You Think
One of the biggest barriers tradies cite is the assumption that setting this up is complicated and time-consuming. In practice, it isn't.
If you're restructuring into a company: this is a one-time process handled by your accountant and a solicitor. Setup typically takes a few weeks. Once done, you don't revisit it.
If you're running an operating lease directly through your existing business: the process is straightforward. You choose your vehicle, agree on the lease terms, and sign the documents. Fleet Leasing Australia handles the sourcing through our nationwide dealer network, and the lease runs quietly in the background.
For a sole trader adding a properly structured operating lease to their business, it adds one line to your BAS. That's it. Once the lease is running, you don't think about it again - except when you notice how much money you're keeping compared to what you were spending on a vehicle you owned outright.
Vehicles That Work Best for Tradies
The most tax-efficient vehicles for tradies are those that qualify for the FBT commercial vehicle exemption - meaning your business pays zero FBT on the vehicle even when it's driven to and from work and used for minor personal purposes on weekends.
These include all dual-cab utes, single-cab utes, vans without rear passenger seating, and vehicles with a payload capacity of one tonne or more. In practice, this covers the vast majority of vehicles that tradies actually want to drive.
Some of the most popular choices among Fleet Leasing Australia's trade clients:
Utes: The Toyota HiLux and Ford Ranger are the two most popular fleet utes in Australia for good reason - strong resale, reliable, well-supported by dealer networks nationally. The Isuzu D-Max and Mitsubishi Triton are strong alternatives at a slightly lower price point, which can improve the monthly payment and total tax saving.
Vans: For tradies who need a van rather than a ute - electricians, plumbers, and refrigeration mechanics in particular - the Toyota HiAce and Mercedes-Benz Sprinter are the two dominant choices. Both qualify for the FBT commercial vehicle exemption and carry strong resale value at the end of the lease term.
What to Do Next
If you're a tradie or sole trader and you're currently buying your work vehicle outright or running an old ute because you thought leasing wasn't for you - it's worth spending three hours with a good accountant to find out what structure suits your situation.
The questions to ask:
1. Should I be operating through a company or trust rather than as a sole trader?
2. Can I access novated leasing through my current or restructured business?
3. Would a fully maintained operating lease achieve a similar result more simply?
Once your accountant has answered those questions, speak with our team about what vehicle and lease structure makes sense. We work with tradies and trade businesses across Australia and can walk you through the commercial fleet options that deliver the best outcome for your specific situation.
You can also browse our current vehicle inventory or explore vehicles by body type to get a sense of what's available before you commit to anything.
Frequently Asked Questions
Do I need to change my business structure to access vehicle tax benefits? Not necessarily. A fully maintained operating lease through your existing ABN delivers significant tax advantages - full payment deductibility and upfront GST recovery - without any structural changes. If you want to access the full benefits of salary packaging through a novated arrangement, a company or trust structure is typically required. Your accountant can advise on what's appropriate for your turnover and circumstances.
What if my turnover fluctuates year to year? This is a common concern for tradies, particularly those in seasonal industries. A lease locks you into fixed monthly payments for the term - which is an advantage in good years and a commitment in slow ones. Most tradies find the predictability valuable, but it's worth stress-testing the monthly payment against a conservative income scenario before signing.
Can I package more than one vehicle? Yes - if you have multiple vehicles used for business, each can potentially be structured to maximise deductibility and minimise FBT exposure. For businesses with two or more vehicles, this is worth discussing with both your accountant and a fleet finance specialist.
What happens at the end of the lease? At the end of a finance lease, you have the option to pay the residual and own the vehicle, refinance the residual and continue leasing, or hand the vehicle back and upgrade to a new model. For most tradies, upgrading at the end of the term makes the most financial sense - you get a new vehicle with the latest safety and fuel economy improvements, and the tax advantages reset.
Is there a minimum income level to make vehicle packaging worthwhile? The higher your marginal tax rate, the greater the saving. The arrangement delivers its strongest benefits from around $90,000 in taxable income upwards. Below that threshold, the tax saving is smaller - though the GST recovery and deductibility benefits still apply through a business lease structure regardless of income level.
This article is intended as general information only and does not constitute financial or tax advice. Vehicle packaging and salary sacrifice arrangements involve complex tax rules that vary based on individual business structure and circumstances. Please consult a qualified accountant before making any changes to your business structure or entering any lease arrangement.
