Novated Lease Calculator Australia

Last updated: May 2026. Reflects current Australian metrics.

See how much income tax you can save by packaging your car finance and running costs into your pre-tax salary. Includes the latest EV FBT exemption rules.

Your Salary & Vehicle

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Lease Settings

Annual Tax Savings

Compared to buying with a standard personal loan

$0
Out of Pocket Cost (Monthly) $0

Take Home Pay Breakdown

Net Take Home WITHOUT Lease (per mo) $0
Net Take Home WITH Lease (per mo) $0

Note: Your 'WITH Lease' take home pay includes all car running costs (Fuel, Rego, Insurance) fully paid for.

How Novated Leasing Works in Australia

A novated lease is a three-way agreement between you, your employer, and a finance company. Instead of paying for a car and running costs out of your own pocket (using money that has already been heavily taxed), your employer deducts the costs directly from your pre-tax salary. This lowers your taxable income, saving you thousands in Income Tax and GST.

The Fringe Benefits Tax (FBT) Catch

Because the ATO sees a car as a 'fringe benefit', they apply an FBT tax. Under the statutory fraction method, the ATO assumes the taxable value of the benefit is a flat 20% of the car's purchase price, regardless of how many kilometres you drive.

The Employee Contribution Method (ECM)

To avoid your employer being hit with an FBT bill (which they would pass on to you), lease companies use the Employee Contribution Method. You simply pay the 20% statutory value using your post-tax salary. This reduces the FBT liability to exactly $0. The rest of the car's finance and running costs are paid from your pre-tax salary. Our calculator automatically handles this ECM split.

The EV Discount: A Game Changer

As of late 2022, the Australian Federal Government introduced the Electric Car Discount. If you lease an eligible Electric Vehicle (EV) or Plug-in Hybrid (PHEV) that sits beneath the Luxury Car Tax threshold for fuel-efficient vehicles (approx $89,332), the vehicle is completely exempt from FBT. This means no post-tax ECM contribution is required. 100% of the finance, charging, insurance, and maintenance costs are deducted pre-tax, making novated leasing an incredibly powerful tool for acquiring an EV.

Included Running Costs

A novated lease doesn't just finance the car; it budgets for your running costs. A portion of your pre-tax deduction is put into a 'running cost account'. You are given a fuel/charge card, and the lease company pays your rego, insurance, and servicing from this pre-tax account. If you don't spend all the money, it is refunded to you at the end of the year (taxed at your marginal rate).

Related Calculators

Car Repayments Novated Lease Balloon Payments

Learn more about car finance at ASIC MoneySmart.

10 Frequently Asked Questions

1. What is a balloon payment?
A balloon payment is a large lump sum due at the end of your car loan term. It reduces monthly repayments but increases total interest paid.
2. Secured vs Unsecured car loans?
Secured loans use the car as collateral and offer lower rates. Unsecured loans do not tie the car to the loan, but have higher interest rates.
3. What is a novated lease?
A novated lease is an arrangement between you, your employer, and a finance company where loan repayments and running costs are paid from your pre-tax salary.
4. What is a PPSR check?
The Personal Property Securities Register (PPSR) check ensures a used car doesn't have money owing on it before you buy it.
5. Are dealer finance rates better?
Dealer rates like 1% often hide costs in the car's purchase price. Always compare the total cost against a bank loan.
6. Can I pay off my car loan early?
Yes, but check for early exit or break fees in your contract, especially for fixed-rate car loans.
7. Does the comparison rate matter?
Yes, it includes upfront fees and monthly account keeping fees, showing the true cost of the loan.
8. What is Fringe Benefits Tax (FBT)?
FBT applies to novated leases, but you can offset it using the Employee Contribution Method (ECM).
9. How do trade-ins work?
A trade-in reduces the total amount you need to borrow, thus reducing your monthly repayments and total interest.
10. Should I finance over 3 or 5 years?
A 3-year term costs less in total interest but has higher monthly payments compared to a 5-year term.