Novated lease calculator for electric and petrol cars

EV novated lease calculator: what the FBT exemption is worth

An eligible electric car pays no fringe benefits tax, so the whole package, running costs included, comes out of pre-tax pay. The table runs the calculator at five prices to show what that's worth against the same price in a petrol car, along with the tax saved, the reportable fringe benefit that still goes on your income statement, and the residual you'd owe at the end. To check whether a particular car qualifies, use the "Is my EV FBT-exempt?" checker on our EV novated lease guide.

What can I lease for $300 a month?

Not much, once running costs are in. On our assumptions, the running costs alone take about $242 a month of take-home pay, so $300 a month covers about $6,400 for an FBT-exempt electric car and about $4,000 for a petrol car. For the finance alone, with running costs paid separately, $300 a month covers an electric car of about $28,000. Whether a particular model fits depends on its drive-away price, so check that against the table rather than a model's advertised price. The calculator's budget mode, under the results, runs your own salary, term and costs.

Novated lease quotes: what to check before you sign

A quote that shows only a deduction per pay can't be compared with anything. Ask the provider for these in writing, then enter them in the calculator:

• The interest rate on the finance, as an annual rate, so you can compare it with a car loan.
• Every fee: establishment, monthly management and any fee built into the running-cost budget.
• The residual, in dollars and as a percentage of the price, and whether GST is added when you pay it.
• The running-cost budget line by line (fuel or charging, servicing, tyres, insurance, registration) and how unspent money is reconciled.
• How GST credits on the price and running costs are passed on to you.
• What happens, and what it costs, if you leave your job or want to end the lease early.

We don't arrange or recommend lease providers. A quote is an offer, not a promise of what you'll be approved for.

How the calculator works

A novated lease is a three-way agreement between you, your employer and a lease provider. You choose the car, the finance company buys it and leases it, and your employer makes the lease and running-cost payments from your salary. The calculator follows the money through the same steps a quote does:

1. GST on the price. Under a full novation the finance company claims the GST in the purchase price, capped at 1/11 of the 2026-27 car limit of $69,883, so it only finances the rest. On a $50,000 car that's a credit of $4,545.
2. Lease payments. The ex-GST amount is repaid over the term down to a residual (balloon) set at the ATO minimum for the term. At 9.50% over 5 years that's $787 a month before GST on a $50,000 car.
3. Running costs. Fuel or charging, servicing, tyres, insurance and registration go into the package. Your employer claims back the GST on the lease payments and on costs that include GST.
4. Pre-tax and post-tax split. For a car that attracts fringe benefits tax (FBT), part of the cost is paid from after-tax pay to cancel the FBT. For an exempt electric car, all of it can come from pre-tax pay.
5. Tax saved. The pre-tax amount lowers your taxable income. The calculator works out income tax and the 2% Medicare levy with and without the lease, including the low income tax offset.
6. Comparison. It prices the same car on a car loan at the same rate, term and final payment, and bought outright with cash, with running costs paid from take-home pay in both. It shows the difference including the residual, and can add the interest your savings would have earned.

Minimum residual values

The residual is the lump sum left owing when the lease ends. Because the finance company claims tax deductions on a lease, the ATO expects the residual to be at least a minimum percentage of the car's cost, set by the lease term. Longer leases have lower residuals, which means higher regular payments but a smaller bill at the end. The calculator sets the residual at this minimum; some providers let you choose a higher one.

The residual works like a balloon on a car loan: it lowers the regular payments because part of the cost is left until the end. Plan for it from day one. You can pay it and keep the car, refinance it, sell the car and use the proceeds, or trade in and start a new lease. If the car sells for less than the residual, you make up the difference. Our novated lease guide covers the end-of-lease options.

Pre-tax and post-tax: why petrol and electric cars differ

When your employer lets you use a car privately, it provides a car fringe benefit. Under the statutory formula the taxable value is 20% of the car's base value each FBT year (the GST-inclusive cost, excluding registration and stamp duty), reduced by anything you pay towards it from after-tax income. FBT is charged at 47% on the grossed-up value, so almost every provider structures the lease to remove it.

They do it with a post-tax contribution equal to the taxable value, often called the employee contribution method. On a $50,000 petrol car that's $10,000 a year from after-tax pay. Your employer has to pay GST on that contribution, so only 10/11 of it goes towards the lease and running costs; the rest of the package comes from pre-tax pay. An eligible electric car has no FBT, so none of this is needed and the whole package can be paid pre-tax.

Two things stand out. The electric car's advantage comes almost entirely from the FBT exemption, not the finance. And for the petrol car the saving is real but modest, so fees and the interest rate matter a lot: at 12.50% instead of 9.50% the petrol saving in this example falls to $10,908, and at lower salaries the tax saved shrinks. Adding a $500 establishment fee and $15 a month in management fees trims the electric car's saving from$27,962 to $27,016.

Lease, loan or cash?

Paying cash avoids interest, so it's tempting to assume it's always cheapest. For an eligible electric car it often isn't: a novated lease pays the car and its running costs from pre-tax salary, and the finance company and your employer claim back the GST, so the tax saved can outweigh the interest. In the $50,000 example the electric lease costs about $11,934 less than paying cash over 5 years. For a petrol car a large part of the package has to come from after-tax pay to cancel the FBT (the employee contribution), so less tax is saved, and paying cash comes out about $7,157 ahead.

Cash has a hidden cost too: the interest that money would have earned. Enter your savings rate in the calculator to count it, after tax. Use the car loan calculator to price the loan option with your own rate and fees.

The electric car exemption in the calculator

The calculator treats a battery electric or hydrogen fuel cell car as FBT-exempt when its price is within the 2026-27 fuel-efficient luxury car tax threshold of $91,661, and treats plug-in hybrids, which stopped qualifying for new leases from 1 April 2025, as cars that attract FBT. The real test also needs the car to have been first held and used on or after 1 July 2022, and uses the threshold for the year the car was first sold at retail. Our EV novated lease guide sets out every test, with a checker for your car.

The exempt benefit still shows on your income statement

The exemption removes the tax, not the reporting. Your employer reports the benefit's grossed-up value (the taxable value it would have had, multiplied by 1.8868) as a reportable fringe benefits amount. You don't pay income tax on it, but it counts in income tests such as the Medicare levy surcharge, study loan repayments, family assistance and child support. On a $50,000 electric car that's about $18,868 a year.

The proposed changes from 1 April 2027 (not law)

In the 2026-27 Budget the government announced it will phase the exemption down. It is not yet law: Treasury consulted on draft legislation in September 2026, and the ATO's page still says "This measure is not yet law." Under the proposal, leases committed to before 1 April 2027 keep the full exemption until they end, while new leases get a smaller concession based on the car's value and when the lease is signed. Pick the lease start in the calculator to see the proposed treatment.

What the estimate leaves out

• Provider fees, unless you enter them. Ask for the establishment fee, the monthly management fee and any fee built into the running-cost budget.
• The interest rate hidden inside a quote. Many quotes show only a per-pay deduction; ask for the rate so you can compare it with a car loan.
• Unspent running-cost budgets, end-of-lease reconciliation and any refund or shortfall.
• What happens if you leave your job: the lease usually reverts to you, and you keep paying from after-tax income unless a new employer takes it on.
• Stamp duty, registration and insurance are treated as part of the drive-away price or running costs you enter.
• The Medicare levy low-income reduction, HELP repayments and the Medicare levy surcharge.

Moneysmart notes that salary packaging usually suits people on middle to high incomes, and suggests getting professional advice. That's sound advice for a lease: the lower your marginal tax rate, the smaller the saving, and on a petrol car at a low salary it can be close to nothing. Our novated lease guide explains the pros, cons and end-of-lease options in full, and the car loan calculator lets you price the alternative with your own rate and fees.

Frequently asked questions