Novated Lease Tax Calculator

It comes down to one question: does the car qualify for the electric car FBT exemption? On an eligible battery electric or hydrogen fuel cell car there is no FBT to manage, so the packaged amount can come out of pre-tax salary, and a $12,000 annual pre-tax deduction on a $100,000 salary cuts income tax and Medicare by $3,840 at 2026-27 rates. On a petrol or diesel car the employer has an FBT liability, and the standard fix in a quote is to take part of your payment out of after-tax salary. Those after-tax dollars reduce the FBT bill, not your taxable income, so the tax saving applies only to the smaller pre-tax slice.

One date to keep in view before you commit to a long term. The ATO states that the government will complete a review into the electric car exemption by mid-2027 to consider electric car take-up. A five-year lease signed now runs well past that review, and no provider quote insulates you from a change in the law.

The tax saving is also one line of a quote, not the deal. Provider fees, the interest built into the lease, the margin on packaged running costs and the residual payment at the end are what decide whether leasing beats buying the car outright. Compare full quote against full quote, and use the calculator below to check that the tax saving the quote claims is the one the 2026-27 rates actually produce.

Salary packaging a car and taking a novated lease are one arrangement under two names. Packaging is what your employer calls the deduction; the novated lease is the finance contract sitting underneath it, and the ATO confirms that benefits provided under a salary packaging arrangement fall inside the electric car exemption. A novated lease is a three-way agreement between you, your employer and a finance company. Your employer makes the lease payments out of your salary, and the pre-tax portion lowers your taxable income. On a $100,000 salary with $12,000 of pre-tax deductions, taxable income drops to $88,000 and tax falls by $3,840 for 2026-27. The calculator above runs your own numbers; it belongs to the same family as the rest of our tax calculators.

The mechanism is the same one behind super sacrifice: swap salary taxed at your marginal rate for a benefit paid before tax. The difference is the destination. Super has a flat 15% contributions tax, while cars bring fringe benefits tax into the picture, and FBT is what provider quotes spend most of their effort managing. For the super version of the arithmetic, see the salary sacrifice calculator.

The exemption covers the private use of an eligible electric car and associated expenses, including the electricity to charge it. One catch worth underlining: the benefit is exempt from FBT but still counts as a reportable fringe benefit on your income statement, which feeds income tests even though no FBT is paid.

This page models the income tax effect of the pre-tax deduction and nothing else. A real quote wraps in FBT handling, GST treatment, running costs, provider fees and a residual payment at the end of the term. Those items decide whether the lease beats buying the car outright, so compare full quote against full quote, not tax saving against sticker price.

The reportable fringe benefit amount also matters if you carry a study loan, because it is added to HELP repayment income. A lease can push your compulsory repayment up even while it cuts your tax; check the effect with the HECS repayment calculator. And before committing to years of deductions, confirm the new pay leaves room to live on using the take-home pay calculator.