Novated Lease
Calculator
See exactly what a novated lease costs after tax — and whether it beats a car loan or buying outright. Includes FBT, GST savings, and all running costs.
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Fill in the form and tap Calculate to see your novated lease savings vs alternatives.
How Does a Novated Lease Work in Australia?
A novated lease is a three-way arrangement between you, your employer, and a finance company. Your employer leases a car on your behalf and makes the repayments from your pre-tax salary — reducing your taxable income and, in turn, your income tax. The running costs (fuel, insurance, registration, servicing) are also bundled and paid pre-tax.
The result is a lower after-tax cost of running a car compared to buying with a car loan or using your own cash. The exact saving depends on your marginal tax rate — the higher your income, the greater the benefit.
What is FBT and how does it affect my lease?
Fringe Benefits Tax (FBT) is a tax your employer pays on non-cash benefits — including car leases — provided to employees. It's calculated at 47% on the taxable value of the benefit. Under the statutory formula method, 20% of the car's base value is treated as a taxable fringe benefit each year, regardless of kilometres driven.
In practice, your employer passes the FBT cost back to you as a post-tax deduction, which reduces the headline saving. Our calculator includes this automatically.
Are electric vehicles FBT exempt?
As of 2024–25, battery electric vehicles, plug-in hybrid electric vehicles, and hydrogen fuel cell cars priced below the luxury car tax threshold (~$89,332) are exempt from FBT when provided through a novated lease. This makes novated leasing exceptionally attractive for EV buyers — the FBT component that previously reduced the saving is eliminated entirely.
What happens at the end of the lease?
At lease end you have three options: pay the residual value and own the car outright, refinance the residual into a new lease, or hand the car back (subject to fair wear and tear). The ATO sets minimum residual percentages based on lease term — your novated lease provider will advise on the applicable rate.