Novated Lease Calculator FY2026-27
Every assumption on this page is a number you can see and change — the interest rate, the residual (balloon) percentage, running costs and any provider fee all have a plain-language source or an explicit "you enter your own" label next to the field, not a number hidden behind a lead form. Enter your own car price, salary, lease term and rate to see the FBT taxable value, how an employee contribution (ECM) offsets it, the income tax and GST saved, and an honest comparison against financing the same car with a plain personal loan.
Calculate your novated lease
EV FBT exemption applies — this car's private use is exempt from FBT, so no employee contribution is needed and the whole lease cost below runs pre-tax.
EV box ticked, but this price doesn't qualify — the entered price is at or above the FY2026-27 LCT threshold for fuel-efficient vehicles ($91,661), so the exemption does NOT apply and FBT/ECM below is calculated as an ordinary car.
FBT taxable value (before employee contribution): $10,000
Employee contribution (ECM) used: $10,000 — FBT payable after it: $0
Pre-tax deduction (per year): $2,603 · Post-tax contribution (per year): $10,000
Income tax saved (per year): $833
Estimated GST saved (per year): $1,273
Residual (balloon) owing at lease-end: $14,065
Total annual lease cost, before tax saving: $12,603
Net cost per year, after tax saving: $11,770
Same car, plain personal car loan (no salary packaging): $13,696 — the novated lease saves you $1,926 a year on this comparison.
This is general information, not financial or tax advice, and is not intended to be relied on for making decisions about a financial product. Consider advice from a licensed financial adviser or registered tax agent — and your own novated lease provider's actual quote — before making any financial decisions.
Estimates for general information — not financial or tax advice. Method, rates and sources are published below.
Net cost per year by salary, car price and EV/petrol (5-year lease, FY2026-27)
Net cost per year (after income tax saving) for a range of salaries and car prices, computed from the engine above at a fixed 5-year term, $4,000/yr running costs and a 7.5% interest rate — so the table isolates what your salary, the car price and EV-vs-petrol change.
| Salary | $40,000 car | $60,000 car | ||
|---|---|---|---|---|
| Petrol | EV | Petrol | EV | |
| $80,000 | $9,960 | $7,400 | $13,580 | $9,740 |
| $100,000 | $9,960 | $7,400 | $13,580 | $9,740 |
| $150,000 | $9,758 | $6,638 | $13,417 | $8,737 |
The EV column is consistently cheaper than the petrol column at the same salary and car price, purely because the FBT taxable value is exempt rather than merely offset — see "How this is calculated" below.
How this is calculated
The FBT taxable value of the car uses the ATO's own statutory formula: base value (the drive-away price you enter) × 20% × days available for private use ÷ days in the FBT year, minus any employee contribution — this calculator assumes a full FBT year (365 days). For a petrol car, the employee contribution (ECM) is set to exactly the taxable value, so FBT payable comes to $0 — the standard way novated leases are structured in practice — and that contribution is taken from your AFTER-tax pay, while the rest of the lease cost is taken from your pre-tax pay. For an eligible EV, the taxable value is $0 by exemption, so no employee contribution is needed at all and the entire cost runs pre-tax.
Income tax saved is the change in your total tax bill (via the same marginal-rate composition as the tax calculator and the salary sacrifice calculator) between your full salary and your salary minus the pre-tax deduction. The residual (balloon) owed at lease-end is the ATO's own minimum percentage for your lease term (ATO ID 2002/1004, 65.63% at 1 year sliding to 28.13% at 5 years) applied to the full drive-away price — the same convention the ATO's own worked example uses. The annual finance cost is a standard reducing-balance loan repayment down to that residual, at your entered interest rate, applied to the car price MINUS an estimated GST credit (capped at 1/11 of the FY2026-27 car limit, $69,883) that a novated lease's financier can generally claim and pass through as a reduced amount financed — an individual buying the same car with a personal loan can't claim that credit, which is most of why "estimated GST saved" includes a car-purchase component as well as a running-costs component (running costs' GST, 1/11 of the amount you enter, is also generally reclaimed by the employer/ financier rather than borne by you).
The personal-loan comparison uses the SAME interest rate, term and residual structure on the FULL (GST-inclusive) car price, with no salary packaging, no tax saving and no ECM — just paying for the car and its running costs from ordinary after-tax income. Using the same residual structure for both sides (rather than comparing against a loan that pays the car off completely) is the more conservative choice: a reader shopping for "a normal car loan" that owns the car outright at the end would face an even higher annual repayment than the comparison figure shows, so if anything this understates the novated lease's advantage rather than flattering it.
Questions to ask your provider
This calculator can't see your actual quote — ask your provider these before signing:
- What's the exact interest/finance rate, and is it fixed for the whole term?
- What residual (balloon) percentage are you using — the ATO minimum, or higher?
- What's your ongoing admin/management fee, and is it inside my pre-tax deduction or charged separately?
- Do you pass through the GST credit on the car purchase to reduce what I'm financing?
- Exactly what's covered in my running-cost budget, and what happens if it runs over or under at review?
- What are my exact options — and any fees — at lease-end?
Sources
- ATO — Taxable value of a car fringe benefit (statutory formula method) — verified 2026-07-11
- ATO — Item 23 fringe benefit categories for FBT return 2026 (Example 6, statutory formula worked example) — verified 2026-07-11
- ATO — Fringe benefits tax: a guide for employers, Chapter 7 (Examples 27–28, ECM and statutory formula) — verified 2026-07-11
- ATO — Reducing your FBT liability (employee contribution method) — verified 2026-07-11
- ATO — Car leasing and FBT (bona fide lease conditions, residual value worked example) — verified 2026-07-11
- ATO Interpretative Decision 2002/1004 — Car lease residual values — verified 2026-07-11
- ATO — Electric cars exemption (EV FBT exemption eligibility) — verified 2026-07-11
- ATO — Luxury car tax rate and thresholds (FY2026-27 fuel-efficient LCT threshold) — verified 2026-07-11
- ATO — Car thresholds from 1 July (FY2026-27 car limit and the GST credit cap) — verified 2026-07-11
- ATO — new tax cuts for every Australian taxpayer (FY2026-27) — income tax brackets used for the tax saving — verified 2026-07-09
Assumptions used here follow the same general approach as ASIC's MoneySmart calculators and may not reflect every personal circumstance — see "What this doesn't model" for specifics.
What this doesn't model
- Reportable fringe benefits on your income statement. An eligible EV's exempt benefit is still "reportable" (a notional taxable value, even though no FBT or income tax is actually charged on it) once it exceeds $2,000 a year — this can affect other income-tested amounts like HECS/HELP repayment income or the Medicare levy surcharge test, even though this calculator correctly shows $0 FBT for an eligible EV. A petrol car's ECM'd-to-zero taxable value doesn't have this issue, since the actual (not notional) taxable value is genuinely $0.
- The one-third base-value reduction after 4 years. The ATO lets you cut a car's FBT base value by a third from the FBT year that starts after 4 years of continuous holding — relevant to year 5 of a 5-year lease. This calculator uses the full, undiminished base value for every year of the term.
- Luxury car lease tax treatment (Division 242). When a leased car's cost exceeds the car limit, income tax law treats the lease as a notional sale-and-loan for the LESSOR/financier rather than an ordinary lease — a deferred-tax-entity issue that can affect how expensive-car leases are priced, which this calculator doesn't attempt to model (it simply caps the GST credit at the car limit and otherwise treats every car the same).
- State stamp duty and registration transfer costs on the vehicle itself — a one-off, state-based cost when the car is first registered, not included in running costs or the finance figure here.
- Insurance bundling variations. Many providers bundle comprehensive insurance into the running-cost budget at a markup over buying it yourself — this calculator only uses whatever running-cost figure you enter.
- Partial FBT years (a car first provided partway through the year) — this calculator always assumes a full 365-day FBT year, and always assumes the 3 "bona fide lease" conditions (arm's length dealing, a residual at or above the ATO minimum, no pre-existing agreement to buy the car) are met; a lease that fails them is taxed as a property or residual fringe benefit instead, a different and messier calculation.
- Whether your specific financier actually passes the car's GST credit through as a reduced financed amount — this is common commercial practice, not an ATO guarantee, so "estimated GST saved" may not match your provider's own numbers exactly.
- Resale/trade-in value of the car against its residual at lease-end.
If any of these apply to you, your actual annual cost will differ from the figures above.
Frequently asked questions
How does a novated lease actually save me money?
Two separate mechanisms, and it's easy to conflate them. First, your employer deducts the lease repayments and running costs from your salary BEFORE income tax is calculated (a "pre-tax deduction"), so you pay income tax on a smaller taxable income — that's a genuine saving, at your marginal tax rate. Second, because the car is a fringe benefit, your employer would otherwise owe fringe benefits tax (FBT) on it; most novated leases avoid that entirely by also taking a slice of the cost as a POST-tax "employee contribution" (ECM) that's set to exactly cancel out the FBT taxable value. The ECM itself doesn't save you anything — it's paid from money you've already been taxed on — it just avoids an FBT bill stacking on top. In this page's example (a $50,000 petrol car, $100,000 salary, 5-year lease), the pre-tax income tax saving is $833 a year, and the $10,000 employee contribution brings the FBT payable to $0.
Is a novated lease worth it?
Not always — it depends heavily on your marginal tax rate and whether the car is an eligible EV. The pre-tax income tax saving only exists because you're taxed at more than the flat rates involved, so it's worth more to someone on the 30%, 37% or 45% bracket than someone on the 15% (soon 14%) bracket, where the saving can be small once a provider's admin fee and any rate premium over a plain car loan are accounted for. An eligible EV changes the calculation a lot, because the FBT taxable value is $0 by exemption rather than merely offset by a post-tax contribution, so the whole lease cost can run pre-tax. For a petrol car on a low income, or a short lease where fixed provider fees are spread over less time, a plain personal car loan can come out cheaper overall — always compare this page's "vs a car loan" figure to your own numbers before assuming yes.
Why does this differ from the quote my novated lease provider gave me?
Almost always fees and rate assumptions. This calculator asks you to enter your own quote's interest rate and any provider admin/management fee explicitly (both default to a generic placeholder, not your provider's actual numbers) because those two figures vary a lot between providers and are usually where a quote's bottom line diverges from a generic estimate like this one. It can also differ if your provider's running-cost budget (insurance, servicing, tyres) is higher or lower than what you enter here, or if their quoted residual (balloon) percentage is set above the ATO minimum this page defaults to. None of that means either figure is wrong — enter your provider's actual rate, fee and residual into this calculator and the gap should mostly close.
What happens to the residual (balloon) payment at the end of the lease?
The residual is the lump sum still owed on the car when the lease term ends — it's not optional, and it's set by the ATO's own minimum-percentage table (or your provider's higher figure) specifically so the arrangement counts as a genuine lease rather than an instalment purchase. At lease-end you typically have three options: pay out the residual in cash and keep the car outright, refinance the residual into a new lease (on the same car or a new one), or trade in or sell the car and use the proceeds toward the residual. If the car is worth less than the residual at that point, you cover the shortfall yourself — this calculator doesn't attempt to predict the car's actual resale value against its residual.
Does the EV exemption really mean zero FBT, with no catch?
For an eligible electric car, yes — no fringe benefits tax is payable on its private use, so (unlike a petrol car) no post-tax employee contribution is needed at all and the whole lease cost can run pre-tax. In this page's EV example (a $55,000 EV on the same salary and term as the petrol example), FBT payable is $0 and the entire $13,463 annual cost is a pre-tax deduction. There is one catch worth knowing: the ATO still treats this as a "reportable fringe benefit" on your income statement even though no actual FBT or income tax is charged on it, which can affect other income-tested things like HECS/HELP repayment income or the Medicare levy surcharge test — see "What this doesn't model" below. The exemption also only applies to battery-electric or hydrogen fuel-cell cars priced below the LCT threshold for fuel-efficient vehicles (plug-in hybrids no longer qualify since 1 April 2025) — tick the EV box above and this calculator will tell you if your entered price is actually under that threshold.
What should I ask my novated lease provider before signing?
At minimum: the exact interest/finance rate and whether it is fixed for the whole term; the residual (balloon) percentage, and whether it is set at the ATO minimum or higher; the ongoing admin or management fee, and whether it is included in the pre-tax deduction shown on your payslip or charged separately; whether the GST credit on the car purchase (capped at the car limit) is passed through to reduce what you are financing; exactly what is included in the running-cost budget (insurance, servicing, tyres, roadside assistance) and what happens if actual costs run over or under that budget at your annual review; and your exact options and any fees at lease-end (paying out the residual, re-leasing, or trading in the car). A provider that cannot answer these plainly is a reason to keep comparing.