About the Novated Lease Calculator
This novated lease calculator estimates how much a salary-packaged car really costs you in Australia. In a novated lease your employer pays the lease and running costs out of your salary. Part of that comes from your pre-tax pay, which cuts your income tax, and your employer claims back the GST, so your net cost can be thousands of dollars a year lower than paying the same bills from your take-home pay.
For petrol, diesel and hybrid cars, fringe benefits tax (FBT) applies. Most providers use the employee contribution method: you pay 20% of the car’s base value each year from your after-tax salary, which reduces the FBT to nil, and the rest of the costs are packaged pre-tax. Eligible battery-electric and hydrogen cars are exempt from FBT if luxury car tax has never been payable on them — for 2026-27 that means a value at or below the $91,661 fuel-efficient threshold — so every dollar can be packaged pre-tax. Plug-in hybrids lost the exemption from 1 April 2025 for new arrangements.
Enter your salary, the car’s price, and the yearly lease payments and running costs from your quote. The calculator uses 2026-27 resident tax rates (the 16% rate falls to 15%) or 2025-26 rates with the Medicare levy and low income tax offset. It ignores the GST car limit, residual payments and provider fees, so treat it as an estimate and compare against a real quote.
With the default inputs, the yearly saving vs paying after tax is $6,109.09. Change any value above to recalculate instantly.
How to use the novated lease calculator
- 1Choose the income year and enter your gross salary.
- 2Pick electric or petrol/hybrid and enter the car’s drive-away price.
- 3Enter yearly lease payments and running costs from your quote, including GST.
- 4Compare the real yearly cost with paying the same bills from your take-home pay.
Formula and method
Your employer pays the lease and running costs and claims the GST back, so the amount packaged from your salary is the GST-exclusive cost (÷ 1.1). Packaging that amount before tax reduces your taxable income; the tax saved is the difference between income tax plus Medicare levy on your full salary and on the reduced salary, using resident rates, the low income tax offset and the Medicare low-income phase-in.
For cars that are not FBT-exempt, the statutory formula gives a taxable value of 20% of the car’s base value. Under the employee contribution method you pay that amount from after-tax salary, which reduces the FBT to nil; your employer remits GST on it, so only the remaining GST-exclusive costs come from pre-tax salary. Eligible zero-emission cars are FBT-exempt, but the grossed-up value (20% × base value × 1.8868) is reported on your income statement. Saving = costs you would otherwise pay from take-home pay − your net cost.
- Costs
- Yearly lease payments plus running costs, including GST
- 20%
- FBT statutory formula rate on the car’s base value
- 1.8868
- Type 2 gross-up rate used for reportable fringe benefits
Worked examples
$60,000 EV on a $100,000 salary (2026-27)
The $16,000 of yearly costs is $14,545 ex-GST, all packaged pre-tax because the EV is exempt. Cutting taxable income from $100,000 to $85,455 saves about $4,655 in tax and Medicare, so the car costs you about $9,891 a year — roughly $6,109 less than paying $16,000 from take-home pay.
$45,000 petrol car, employee contribution method
The FBT taxable value is 20% × $45,000 = $9,000, paid after tax to remove FBT. The other $5,000 of costs is $4,545 ex-GST and is packaged pre-tax, saving $1,455 in tax at the 30% + 2% rate. Net cost is about $12,091, a saving of $1,909 a year.
$150,000 salary, $70,000 EV in 2025-26
All $19,500 of costs ($17,727 ex-GST) is packaged pre-tax. $15,000 of that falls in the 37% bracket and $2,727 in the 30% bracket, saving $6,723 including the 2% Medicare levy, so the car costs about $11,005 a year instead of $19,500.
Frequently asked questions
How does a novated lease save tax?+
Your employer pays the car costs from your pre-tax salary, which lowers your taxable income, and also claims back the GST on the car and running costs. You pay less income tax and no GST on the packaged amount.
Are electric cars exempt from FBT on a novated lease?+
Yes, if the car is a battery electric or hydrogen fuel cell car first held and used on or after 1 July 2022, and luxury car tax has never been payable on it. For 2026-27 the fuel-efficient LCT threshold is $91,661.
Are plug-in hybrids still FBT-exempt?+
Not for new arrangements. From 1 April 2025 plug-in hybrids are no longer zero or low emission vehicles for the exemption, although arrangements already in place before then can continue to use it.
What is the employee contribution method?+
For cars that attract FBT, you pay part of the costs from after-tax salary — usually 20% of the car’s base value each year under the statutory formula. This reduces the taxable value, and the FBT, to nil.
Does a novated lease affect my income tests?+
Eligible EV benefits are reported on your income statement as a reportable fringe benefit. It is not taxed, but it counts towards things like the Medicare levy surcharge, Division 293 and some government benefit and child support tests.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.