Novated Lease Calculator (Australia)
Estimate the tax savings from salary packaging a car on a novated lease, using 2025-26 FBT and income tax rates — with the Employee Contribution Method and the EV FBT exemption built in.
A novated lease lets you pay for a car and its running costs from your pre-tax salary, reducing your taxable income. Fringe Benefits Tax (FBT) applies — the Employee Contribution Method (ECM) or the EV exemption are used to reduce it to nil.
How this estimate is calculated
We use 2025-26 rates: resident income tax (16% / 30% / 37% / 45% brackets) plus the 2% Medicare levy, the 47% FBT rate, the Type-1 gross-up of 2.0802 and the 20% statutory taxable value. Finance and running costs are packaged GST-exclusive (your employer claims the GST input tax credit), the residual uses the ATO minimum for your term, and the EV exemption applies to eligible electric vehicles priced under the fuel-efficient luxury car tax threshold of $91,387. Compare a straight loan with our car loan repayment calculator or weigh up a lease vs buy decision.
Frequently asked questions
What is the Employee Contribution Method (ECM)?
ECM means you pay the car's taxable value (20% of its base value) from your post-tax salary. This reduces the FBT to nil, so the rest of the package can come from pre-tax income. Without ECM (and without the EV exemption), FBT can make a novated lease more expensive than a normal loan.
Why do electric vehicles save more?
Eligible battery-electric and hydrogen fuel-cell vehicles under the fuel-efficient LCT threshold ($91,387 for 2025-26) are exempt from FBT, so the entire package can be salary-sacrificed pre-tax. Plug-in hybrids no longer qualify for new arrangements entered from 1 April 2025.
What happens to the residual at the end?
At lease end you pay the residual (plus GST) to keep the car, or you can re-lease or trade it in. The ATO sets minimum residuals by term. See how a lump sum works on our balloon payment calculator.
Is a novated lease better than a car loan?
It depends on your salary, the car and whether it's an EV. Read our guide comparing a novated lease vs a traditional car loan.
Does this include GST savings on the purchase?
Yes — the model finances and packages costs GST-exclusive because the employer claims the GST input tax credit, which is a genuine novated-lease benefit. Your provider's quote may vary based on fees and packaged items.
Estimates only, using 2025-26 rates, and not tax or financial advice. Actual outcomes depend on your employer's package, lease fees, running-cost estimates, your full tax position (including offsets and other income) and the FBT method used. Confirm figures with a licensed adviser and your novated lease provider.