A full service lease (also called a fully maintained lease or fully maintained operating lease) bundles vehicle finance, maintenance and administration into a single regular payment. This arrangement simplifies vehicle ownership for your business by providing predictable running costs, reducing administrative overhead and delivering a turnkey fleet solution. This guide explains what a full service lease covers, how monthly payments are calculated, tax and accounting implications, cost drivers and a practical checklist to compare providers with confidence.
A full service lease is a commercial vehicle leasing arrangement in which the lessor provides the vehicle and manages most operating costs for the contract term. Under a full service lease you pay a fixed monthly fee that typically covers vehicle finance plus an agreed package of services such as scheduled maintenance, tyres, registration and fleet administration. The aim is cost predictability and reduced in-house fleet administration.
Who uses it?
Full service leases are also known as fully maintained operating leases or fully maintained leases. They differ from a finance lease (a capitalised arrangement) or a novated lease (a salary packaging arrangement).
A full service lease follows a straightforward lifecycle:
Key contract features include kilometre limits and excess-kilometre charges, residual or balloon value (which affects your monthly payment), service level agreements (SLA) specifying repair response times and authorised repairers, and early termination penalties.
Most full service leases bundle a combination of these items:
Common variations exist: some providers include comprehensive insurance; others require you to insure and claim costs back. Always check whether insurance, fuel management and accident administration are included.
Typical exclusions and optional items:
If you need salary packaging, compare with novated lease options which handle employee salary deduction arrangements.
Monthly full service lease payments are built from several elements:
A simplified illustrative formula for the monthly payment:
Monthly payment = Depreciation charge + Interest charge + Maintenance pool + Admin & risk fees + GST (where applicable)
Total illustrative monthly payment = $100 + $120 + $10 + $10 + $12 = $152 per month
If you exceed the agreed kilometres, expect excess-kilometre charges (e.g., $1.15–$1.45/km) and higher wear-related costs which increase the monthly effective cost.
This section summarises common treatments. Verify with a tax adviser for your specific circumstances.
GST is generally payable on lease payments and on maintenance charges. Businesses registered for GST can usually claim GST credits on lease payments and related service charges subject to business-use apportionment. See the ATO guidance on leasing assets and GST for more information. For purchases, GST is claimed upfront on the purchase price, subject to input tax credits rules.
Full service leases used by the business for an employee's private use can create FBT liabilities. The ATO has specific rules on cars and car fringe benefits. Novated leases often sit within salary packaging arrangements and have different FBT implications.
Lease payments that represent operating costs (i.e., an operating or full service lease) are generally treated as tax-deductible business expenses over the term for GST-inclusive amounts, subject to apportionment rules. Full service leases are typically off-balance-sheet for the lessee (operating treatment), but accounting standards and reporting requirements may affect presentation. Keep detailed records for BAS reporting and GST claims. Consult your accountant or the Australian Accounting Standards Board for lease accounting standards.
| Feature | Full Service Lease | Operating Lease | Finance Lease | Novated Lease | Purchase |
|---|---|---|---|---|---|
| Who pays maintenance | Lessor (included) | May or may not | Lessee | Employee/employer (varies) | Owner |
| Balance sheet impact | Often off-balance | Off-balance | On-balance | Depends | On-balance |
| Predictable monthly cost | High | Medium | Low | Medium | Low |
| Tax treatment | Operating expense | Operating expense | Depreciation + interest | Salary packaging / FBT | Depreciation / input tax credit |
| Suited to | Businesses wanting turnkey fleet | Businesses wanting finance-only | Buyers financing purchase | Employee salary-package cars | Owners / long-term holders |
| Key risk | Contract inflexibility, cost premium | Residual risk | Ownership obligations | FBT rules | Depreciation risk |
For more detail on these alternatives, consult specialist leasing resources.
Typical requirements include business ABN/ACN and proof of trading history, financial statements or BAS statements for credit assessment, director/owner ID and residential details for personal guarantees, vehicle selection details (make, model, optional extras), and desired term and kilometre band.
To speed approval:
Providers may run credit checks and request personal guarantees for small businesses. Review expected lead times (vehicle order + delivery) and service commencement dates.
When comparing full service lease providers, use this checklist:
Here is an illustrative example (AUD) for a single light commercial vehicle:
Estimated monthly full service lease payment = $187.50 + $160 + $120 + $15 + $15.50 = $1,018 per month (incl. GST on services)
If you increase the annual kilometres by 25% and exceed the contract band, expect an additional excess-kilometre charge of $1.30/km — for example, 5,000 km excess would add approximately $1,500 spread over remaining months.
Usually scheduled maintenance and common wear items are included, but check the contract for exclusions and caps.
It depends — some leases include comprehensive insurance; others require you to arrange insurance and claim back costs or pay an additional premium.
Many contracts allow purchase at the agreed residual value; other options include returning or extending the lease.
Lease payments are generally deductible as operating expenses for business use, subject to apportionment rules — confirm with your accountant.
You'll incur excess-kilometre charges typically set per kilometre in the contract.
No. A novated lease is a salary-packaged arrangement linking employee remuneration and leasing.
Operating leases are often off-balance-sheet for the lessee, but accounting standards and company reporting may require different presentation — consult your accountant.
Use a TCO approach, review SLAs, and check for hidden fees and return conditions.
Full service leases suit businesses that prioritise predictability and low administrative overhead, offering a turnkey fleet solution with fixed monthly costs. When evaluating options, always compare total cost of ownership rather than headline monthly rent, and carefully review service level agreements, excess-kilometre charges and end-of-lease return conditions before committing.
This article is general information only and is not legal, tax or financial advice.