Novated Lease Calculator
Novated lease vs buying: GST saving, ATO residual, annual lease cost, the EV FBT exemption or employee-contribution method, income tax saved at your marginal rate, net monthly cost and the advantage over an after-tax car loan.
| GST saving on the purchase (employer claims it) | — |
|---|---|
| Residual (balloon) at the end of the lease | — |
| Annual lease cost (finance + running + fees) | — |
| FBT treatment | — |
| Pre-tax / post-tax split of your deductions | — |
| Income tax saved per year | — |
| Net cost to you per year (after tax saving) | — |
| Buying the same car with after-tax pay (loan + running costs) | — |
| Novated lease advantage per year | — |
| Watch-outs | — |
In short
A novated lease pays a car's finance and running costs from salary through your employer; for battery electric vehicles under the luxury car tax threshold the whole cost is FBT-exempt and comes from pre-tax pay, with the employer reclaiming GST, so a $65,000 EV costs a 32%-rate earner about $1,000 a month net — roughly $7,000 a year less than buying with an after-tax loan. Petrol cars incur FBT on 20% of the price, usually offset with post-tax contributions, which shrinks the saving.
Who this is for: Australian employees offered a novated lease, especially for an EV.
Novated leases and the EV exemption
- EVs: battery electric and hydrogen cars under the luxury car tax threshold for fuel-efficient vehicles are FBT-exempt — lease payments, charging, insurance, rego and servicing all come from pre-tax salary, and the employer claims the GST. A $65,000 EV typically costs a 39%-rate earner $600–700 a month net all-in.
- Petrol/diesel/hybrid: FBT applies on 20% of the car value, cancelled by paying that amount post-tax; the saving is smaller but GST and bundled running costs still help, especially for high-km drivers.
- Plug-in hybrids lost the exemption for new leases from 1 April 2025 (existing leases keep it to their end).
- Residual values are set by the ATO (e.g. 37.5% after 4 years); you own the car once you pay it. Over-estimated residuals are a common trap.
- Reportable fringe benefits from an exempt EV still count for HELP, Medicare levy surcharge and family payments.
See also: Car Lease vs Buy Calculator, Pay Calculator Australia 2026–27.
Assumptions
- Lease on the GST-exclusive price to the ATO minimum residual (65.63% / 56.25% / 46.88% / 37.5% / 28.13%); running costs ex GST.
- EVs under the LCT threshold: all pre-tax; others: 20% of the price post-tax (employee contribution method) and the rest pre-tax.
- Buy comparison: loan at the same rate to the same residual plus running costs, all after tax.
Worked example
GST-exclusive price $59,091 (saving $5,909 of GST); residual 37.5% = $22,159. Finance about $12,800 a year + $5,000 running (ex GST) + $500 fees = $18,300 a year, all pre-tax because the EV is exempt. At a 32% marginal rate that saves about $5,860 of tax, so the net cost is about $12,450 a year ($1,037 a month). Buying with an 8.5% loan and paying running costs after tax would cost about $20,050 a year — the lease is roughly $7,600 a year cheaper, about $30,400 over four years. The reportable fringe benefit of about $27,000 still counts for HELP and the Medicare levy surcharge.
Frequently asked questions
Are electric cars FBT-exempt on a novated lease?
Yes — battery electric and hydrogen cars first used from 1 July 2022 and priced under the fuel-efficient luxury car tax threshold are exempt, so the entire lease and running costs come from pre-tax salary.
How much can I save with an EV novated lease?
Typically 30–45% of the car's all-in running cost for someone in the 30–37% bracket — the tax saving on $15,000–20,000 of annual costs plus the GST on the purchase.
What happens at the end of a novated lease?
You pay the ATO-set residual (e.g. 37.5% after 4 years) to keep the car, re-lease it, or sell it and pocket any surplus above the residual.
Is a novated lease worth it on a petrol car?
Sometimes — the GST saving and pre-tax running costs help high-income, high-km drivers, but the post-tax FBT contribution and higher finance rates erode much of the benefit.
What if I change jobs?
The lease is novated to your new employer if they agree; otherwise you pay the lease directly (without the tax benefits) until it is re-novated or paid out.
Can I lease a used EV?
Yes, if it was first held and used after 1 July 2022 and was under the LCT threshold when first sold.
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