Novated Lease Calculator 2026-27

How the calculator works the deduction out

A novated lease has three parties: you, your employer and a financier. The financier buys the car, claims the GST in its price as a credit, and leases it on a finance lease with a balloon at the end. Your employer agrees to pay the lease and the running costs on your behalf and takes the same amount out of your pay. Two deductions appear on the payslip.

• The pre-tax deduction covers the lease payments and running costs, GST-exclusive, because your employer claims the GST back on everything it pays. It lowers your taxable income, which is where the income tax saving comes from.
• The post-tax deduction exists only for cars that are not exempt. Under the employee contribution method you pay the car's taxable value, 20% of its price, from after-tax pay. That payment brings the FBT to nil. Your employer keeps the GST part of it and reduces the pre-tax deduction by the rest.

The calculator follows that order. It finances the price less one-eleventh, applies the ATO minimum residual for the term you choose, works out monthly payments in advance, adds running costs and fees, splits the total between pre-tax and post-tax pay, and recomputes your income tax, low income tax offset and Medicare levy on the lower salary. The comparison line takes a loan on the full price at the same rate, with the same balloon and the same running costs, paid from take-home pay. Both sides owe the same balloon at the end, so the yearly difference is the real saving.

Electric, petrol or no ECM: three results for one car

Same $55 000 car, same five-year lease at 8%, same $100 000 salary: the drivetrain decides how much of the cost goes through pre-tax pay.

Without ECM the employer's FBT of $10 755 is added to the pre-tax deduction. Because FBT is charged at 47%, above the 32% marginal rate of a $100 000 earner, that option almost always loses, which is why providers apply ECM by default to any car that is not exempt.

Why the comparison with paying it yourself matters

Lease quotes usually show the drop in take-home pay and call the gap with the gross cost a saving. That inflates the result: you would not buy a car with pre-tax dollars anyway. The honest benchmark is a car loan at the same rate, the same running costs and the same balloon, all from after-tax income. Measured that way, the $55 000 electric car saves $6 025 a year on $100 000, made of income tax and Medicare levy on the pre-tax deduction and the GST on the price and running costs.

What your salary changes

The income tax part of the saving is your marginal rate applied to the pre-tax deduction, so it grows with salary. The GST part does not depend on income at all.

On $60 000 the pre-tax deduction pushes taxable income into the band where the low income tax offset phases out, which adds a little to the marginal rate. At $160 000 the deduction is saved at 39 cents in the dollar until taxable income drops back under the 37% threshold of $135 000.

Fees, the residual and the end of the lease

Providers charge a management fee, often a few hundred dollars a year, plus a margin in the interest rate. A $600 annual fee on the $100 000 example cuts the saving from $6 025 to $6 254. Enter the fee and the rate from your quote, not the advertised ones.

At the end of the term you pay the residual, refinance it into a new lease or hand the car back. For five years the ATO minimum residual is 28.13% of the amount financed; on the $55 000 car that is $15 472 including GST. The residual values page gives every term and what each option costs.

Electric cars, plug-in hybrids and the luxury car tax line

A battery electric or hydrogen car first used from 1 July 2022 is exempt from FBT if its price at first retail sale stayed under the luxury car tax threshold for fuel-efficient vehicles, $91 661 in 2026-27. Plug-in hybrids lost the exemption from 1 April 2025, except under leases already running and binding before then. The details, and a check of your own car, are on the EV FBT exemption page, the PHEV page and the luxury car tax threshold page.

What the result does not include

• The car limit. The financier's GST credit is capped for cars above the ATO car limit, so the saving shown is too high for expensive petrol cars.
• Reportable fringe benefits. An exempt electric car still produces a reportable amount (shown in the results), which can raise HELP repayments and the Medicare levy surcharge. The reportable fringe benefits page works out by how much.
• Insurance excess, fines and tolls. They stay outside the package and are paid from your own pocket, exactly as if you owned the car.

Novated leasing is one piece of salary packaging. The salary packaging calculator covers hospital and charity packaging, and the salary sacrifice super calculator the other common use of pre-tax pay.