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:
- 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.
- 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 9.40% over 5 years that's $785 a month before GST on a $50,000 car.
- 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.
- 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.
- 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.
- Comparison. It prices the same car on a car loan at the same rate, term and final payment, with running costs paid from take-home pay, and shows the difference including the residual.
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.
| Lease term | Minimum residual (% of cost) | On a $50,000 car (ex-GST cost $45,455) |
|---|---|---|
| 1 year | 65.63% | $29,832 |
| 2 years | 56.25% | $25,568 |
| 3 years | 46.88% | $21,309 |
| 4 years | 37.5% | $17,045 |
| 5 years | 28.13% | $12,786 |
Plan for the residual 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.
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.
| Electric, current exemption | Petrol or hybrid (FBT applies) | Electric, lease signed from 1 April 2029 (proposed) | |
|---|---|---|---|
| Package cost a year (ex GST) | $13,498 | $13,498 | $13,498 |
| Paid from pre-tax salary | $13,498 | $4,407 | $6,680 |
| Post-tax contribution | $0 | $10,000 | $7,500 |
| Tax and Medicare levy saved | $4,319 | $1,410 | $2,137 |
| Cost to take-home pay, per fortnight | $353 | $500 | $463 |
| Residual to pay at the end (incl. GST) | $14,065 | $14,065 | $14,065 |
| Saving vs a car loan over 5 years | $27,895 | $8,804 | $13,577 |
| Reportable fringe benefits a year | $18,868 | $0 | $0 |
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 12.40% instead of 9.40% the petrol saving in this example falls to $10,840, 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$27,895 to $26,950.
| Car price | Electric (exempt) | Petrol or hybrid | Residual at end (incl. GST) |
|---|---|---|---|
| $30,000 | $255 | $343 | $8,439 |
| $45,000 | $328 | $461 | $12,659 |
| $50,000 | $353 | $500 | $14,065 |
The electric car FBT exemption
Private use of an electric car is exempt from FBT, together with its running costs such as registration, insurance, maintenance and electricity, if all of these are true:
- It is a battery electric or hydrogen fuel cell electric car (designed to carry less than one tonne and fewer than nine people).
- It was first both held and used on or after 1 July 2022. A used EV that was on the road before then doesn't qualify.
- It is used by a current employee or their associates.
- Luxury car tax has never been payable on it, which means its value was under the fuel-efficient luxury car tax threshold when it was first sold at retail ($91,661 in 2026–27, $91,387 in 2025–26).
| Financial year | Fuel-efficient vehicles | Other vehicles |
|---|---|---|
| 2025–26 | $91,387 | $80,567 |
| 2026–27 | $91,661 | $80,809 |
Plug-in hybrids stopped qualifying from 1 April 2025. One already on an exempt lease can stay exempt while a financially binding commitment made before that date continues, but an optional extension, a change to the payments or residual, or a new employer ends it. The calculator treats plug-in hybrids as cars that attract FBT.
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 the ATO adds it back for income tests, including the Medicare levy surcharge, the private health insurance rebate, study and training loan repayments, the super co-contribution, family assistance payments and child support. On a $50,000 electric car that's about $18,868 a year. If you're near a threshold for any of those, factor it in.
The proposed changes from 1 April 2027
In the 2026–27 Budget the government announced it will phase the exemption down. The change is not yet law: Treasury released draft legislation for consultation in September 2026. 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.
| Lease (commitment) made | Base value $75,000 or less | Base value above $75,000, up to the LCT threshold |
|---|---|---|
| Before 1 April 2027 | Fully exempt until the lease ends | Fully exempt until the lease ends |
| 1 April 2027 to 31 March 2029 | 100% discount (no FBT) | 25% discount (15% statutory rate) |
| From 1 April 2029 | 25% discount (15% statutory rate) | 25% discount (15% statutory rate) |
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
How much is a lease on a $45,000 car?
On our assumptions (5 years at 9.40%, a $100,000 salary, $4,400 a year in running costs and no provider fees), about $328 a fortnight from take-home pay for an FBT-exempt electric car, or $461 for a petrol car, running costs included. You then owe a residual of about $12,659 including GST. Provider fees and a higher rate push these up.
What is the lease payment on a $30,000 car?
The finance part alone is about $471 a month before GST over 5 years at 9.40% with the ATO minimum residual. With running costs and tax savings included, the cost to take-home pay is roughly $255 a fortnight for an exempt electric car and $343 for a petrol car on a $100,000 salary.
Is a novated lease worth it?
For an electric car that qualifies for the FBT exemption it is often well ahead of a car loan: about $27,895 over 5 years in our $50,000 example. For a petrol or hybrid car the saving is much smaller ($8,804 in the same example) and can disappear with provider fees, a higher interest rate or a lower salary. Get a quote with the rate and every fee, and compare it with a car loan.
What happens at the end of a novated lease?
You pay the residual (plus GST) and keep the car, refinance the residual, sell the car and pay out the residual, or trade it in and start a new lease. If the car is worth less than the residual, you pay the difference.
Is a novated lease calculator accurate?
Only as accurate as its assumptions. Many provider calculators don't show the interest rate, fees, residual or tax rates they use. This one lists every assumption under the result. Treat any calculator as a starting point and check the numbers on a written quote.
Does a novated lease reduce my super?
Salary packaging doesn't change the super guarantee your employer has to pay on your ordinary time earnings, but ask your employer how it calculates super on a packaged salary. The reportable fringe benefit from an electric car can affect income tests, including the super co-contribution.
