Novated Subscription FAQs
Can I swap or upgrade my vehicle during the novated subscription?
Yes, absolutely. This agility is exactly what our subscription model is engineered for. In a standard novated lease, you keep a single car for years, regardless of how your life shifts. With Karmo, once you complete your initial minimum plan term (from 4 months), you are free to refresh or upgrade into a different model to match your changing lifestyle.
Can Karmo service my plan if my company has an exclusive salary packaging agreement with an alternative provider?
No. Karmo’s Novated Subscription is powered exclusively through our partnership with Smart. If your employer operates under an exclusive contract with an alternative provider, we won’t be able to support you in a Novated Subscription. In these instances, you can still drive a brand-new vehicle by applying for a flexible Karmo Personal Subscription.
How do kilometre allowances and excess distances work on my novated subscription?
Every Karmo plan includes a generous 385 km/week allowance, which works out to just over 20,000km per year. Your unused kilometres are automatically saved and accrued, so you can use them later for long weekend road trips without any extra charges. If you happen to exceed your total accumulated kilometre allowance, an excess km fee is charged at a standard rate of 30 cents per kilometre.
How is a Novated Subscription different from a traditional novated lease?
Traditional novated leases lock you into three-to-five-year finance contracts and can carry a hidden sting: a mandatory, high-risk “residual payment” lump sum required to own the car at the end of the term. This exposes you to unpredictable risks if used car values drop.
A Karmo Novated Subscription completely rewrites the script:
- Shorter timelines: Plans start from a minimum of just 4 months.
- Zero debt: There is no looming residual payment or final lump sum to clear.
- No asset risk: Any depreciation and technological obsolescence risk is ours to manage, not yours.
How is the regular payment for my novated car handled?
The payment process is automated through your workplace’s internal payroll cycle. Your employer handles the necessary calculations, taking the precise subscription amount directly out of your pre-tax (or a structured combination of pre- and post-tax) salary before your net pay hits your personal bank account. The payroll department then makes the payment straight to Karmo, making your vehicle budgeting entirely predictable.
Is employer involvement required for a novated subscription?
Yes, because a Novated Subscription utilises a pre-tax salary sacrifice mechanism, your employer’s payroll department must be involved to facilitate the arrangement. The payroll team sets up the recurring automated deductions using a standardized three-way novated agreement. Thanks to our direct backend partnership with Smartgroup, the administrative onboarding is exceptionally clean, simple, and straightforward for your company’s HR or payroll managers to deploy.
What are the tax benefits, and how do EV fringe benefits work on a novated subscription?
A Novated Subscription unlocks the exact same tax advantages as a traditional novated lease. By deducting your regular car payments directly from your pre-tax salary, you effectively lower your total taxable income, your annual income tax obligation. Furthermore, eligible Electric Vehicles (EVs) that sit below the luxury car tax threshold qualify for full Fringe Benefits Tax (FBT) exemptions under current Australian legislation. This allows you to maximise your tax savings and optimise your take-home pay while driving a brand-new vehicle.
What costs are included in the weekly fee on my novated subscription?
To minimise your exposure to unexpected bills, Karmo bundles all standard vehicle operating costs into one transparent fee. Your pre-tax salary sacrifice payments cover:
- The cost of your brand-new vehicle
- Comprehensive automotive insurance
- Local state vehicle registration
- All routine servicing and maintenance
- Emergency roadside assistance
The only costs you are personally responsible for covering are your everyday fuel or charging costs and toll charges.
What happens to my novated subscription if I change jobs?
Traditional novated leases carry a heavy “employment dependency risk,” meaning if you lose or switch your job, the contract instantly breaks and you are left personally liable for lease payouts. A Karmo Novated Subscription offers career portability. If you change employers, you can transition the salary-packaged plan over to your new workplace or convert it into a standard Karmo Personal Subscription paid via your post-tax income.
What is a Novated Subscription, and how does it work?
A Novated Subscription is an innovative salary packaging solution launched by Karmo in partnership with Smart. It blends the tax-saving benefits of a traditional novated lease with the flexibility and short-term commitment of a vehicle subscription. It operates as a smooth three-way agreement between you, your employer, and Karmo, allowing your vehicle costs to be managed directly through your regular payroll process.
What is the difference between a Novated Subscription and a Personal Subscription?
They are two different paths to get you into a brand-new vehicle with a bundled payment and zero end-of-term debt:
- Salary-Sacrifice & Tax Savings: A Novated Subscription is a pre-tax salary sacrifice arrangement managed by your employer’s payroll department. It reduces your overall taxable income and unlocks full Fringe Benefits Tax (FBT) exemptions on eligible Electric Vehicles. Conversely, a Personal Subscription is paid directly from your post-tax income via a personal bank account or credit card, meaning it does not offer direct salary packaging tax breaks.
- Employment Independence: A Personal Subscription is independent of your job. The contract is strictly between you and Karmo so you enjoy career portability – meaning you can switch employers, take time off between jobs or change careers with zero impact or adjustments on your car plan. A Novated Subscription relies on an active three-way agreement between you, your workplace and Karmo.
Choose a Novated Subscription if your employer provides salary packaging plans and your main priority is tax savings while driving a new car. Choose a Personal Subscription if your workplace doesn’t support salary packaging, or if you simply prefer to keep your personal transport separate from your day job.
