Novated Lease Calculator Australia 2026-27

How a Novated Lease Works in Australia

A novated lease is a three-way agreement between you, your employer, and a finance company. Your employer deducts lease payments and car running costs from your pre-tax salary, which reduces your taxable income. You save in three ways:

• No GST on the car: the financier claims the GST credit, so you effectively pay the GST-exclusive price — roughly a 10% saving on purchase and running costs.
• Income tax savings: lease and running costs come out before tax, so each packaged dollar saves tax at your marginal rate (30–45% for most lessees) instead of being spent from after-tax pay.
• EV FBT exemption: eligible battery-electric and hydrogen vehicles under the $91,387 luxury car tax threshold are exempt from Fringe Benefits Tax until at least 31 March 2027 (plug-in hybrids lost the exemption in April 2025). This is what makes EV novated leases dramatically cheaper than petrol equivalents.

For petrol, diesel and hybrid cars, FBT applies — usually calculated at the 20% statutory rate on the car's base value — which claws back much of the income tax saving. That is why the same lease on a $45,000 petrol car often saves only a quarter of what an EV saves.

Worked example

On a $95,000 salary leasing a $55,000 EV over 5 years with $3,500/year running costs: the pre-tax package is about $14,500/year, saving roughly $4,600/year in income tax and Medicare levy at the 30% marginal rate, plus about $6,600 GST across the term — with zero FBT. Total saving versus financing the same car with after-tax dollars: typically $20,000–$28,000 over 5 years.

What to watch out for

• Residual value: the ATO sets minimum residuals (e.g. 28.13% after 5 years). You owe this balloon payment at the end — budget for it.
• Interest and fees: novated lease interest rates are often higher than car loans. Always compare the total package cost, not just the tax savings.
• Job changes: if you leave your employer, the lease obligations transfer to you personally until a new employer takes over the novation.
• Reportable fringe benefits: even FBT-exempt EVs appear as reportable fringe benefits, which can affect HECS repayments, family tax benefits and child support assessments. Model this with our HECS calculator.

Compare your take-home pay with and without packaging using our pay calculator or see how it stacks against straight salary sacrifice into super.