Why do I have to have a residual?

Because the ATO said so

There is no single piece of paper or web link, but the ATO set the residual guideline so that all novated leases are treated with the same and gain benefits.

If you and a friend both fell in love with the same car, same options and same price... you both should get the same benefit under a novated lease... shouldn't you?

You jump into a 3 year novated lease
So your residual would be 46.88% of the purchase price

The friend decides to be different and do 3 consecutive 1 year novated leases. 1st year would have a residual of 63.65%, the second year would be 56.25%, and the final term would have a residual 46.88%

Even though you both had different finance terms, the final residual is the same. (but don't tell your friend, they actually paid more because there were 3 setup fees where as you only had one!)

Where to next

Basics done, show me more

I'm ready to do the numbers

Novated Car Lease Calculator