Novated Lease Calculator
See exactly how much you save with a novated lease in 2025-26. Includes FBT, ECM employee contributions, and EV exemption. Enter your vehicle price and salary to get started.
Vehicle
Electric / Plug-in Hybrid (EV/PHEV)?
FBT-exempt if below $89,332 LCT threshold
Lease Term
Residual value: $31,950 (71% of vehicle price)
Annual Kilometres
Affects running cost estimates only. FBT statutory rate is flat 20% regardless of km.
Your Salary
Annual Running Costs
Annual Saving with Novated Lease
per year vs paying cash from take-home pay
$13,605
Pre-tax deduction
Per year from gross salary
$4,354
Tax saving
At 32% marginal rate
$8,005
Annual lease cost
3yr @ 9.5% p.a.
$18,251
Effective car cost
True out-of-pocket/yr
FBT & ECM
With ECM your employer pays $0 FBT. You contribute $9,000 post-tax, which is still less than paying for the car entirely from after-tax income.
Cost Comparison
Without novated
$13,605
/yr from take-home pay
With novated lease
$18,251
/yr effective cost
-34% cheaper with novated lease
Year-by-Year Saving
| Year | Annual saving | Cumulative |
|---|---|---|
| Year 1 | -$4,646 | -$4,646 |
| Year 2 | -$4,646 | -$9,293 |
| Year 3 | -$4,646 | -$13,939 |
| Total over 3yr | -$13,939 |
True Cost Over 3 Years
Total payments (novated)
$67,815
Lease + running + ECM
Total tax savings
−$13,061
Income tax reduction
True cost of car
$54,754
vs $40,815 without novated
Running Costs Breakdown
What is a novated lease?
A novated lease is a three-way arrangement between you, your employer, and a finance company. Your employer makes lease payments on your behalf from your pre-tax salary — reducing your taxable income and saving you income tax. Running costs (fuel, insurance, rego, maintenance) can also be bundled in and paid pre-tax, giving you a complete all-inclusive car package.
How does FBT work with novated leases?
Fringe Benefits Tax (FBT) is charged at 47% on the taxable value of a car fringe benefit. Using the statutory formula method, the taxable value is 20% of the vehicle's base value per year. The Employee Contribution Method (ECM) lets you make a post-tax contribution equal to the FBT taxable value, reducing your employer's FBT liability to zero.
EV and PHEV FBT exemption 2025-26
Zero and low emission vehicles (battery electric, hydrogen fuel cell, and plug-in hybrids) are exempt from FBT in 2025-26, provided the vehicle's value is below the luxury car tax threshold of $89,332. This means no ECM contribution is needed, and all lease and running costs can be paid from pre-tax salary — a significant extra saving compared to a petrol equivalent.
How to get the best novated lease deal
Compare quotes from multiple novated lease providers (salary packaging companies). Ensure the quoted interest rate is competitive — this calculator uses 9.5% p.a. as a benchmark. Check what running costs are included, as bundling more expenses pre-tax increases your tax saving. Confirm your employer offers novated leasing as a salary packaging benefit.
Calculations are estimates based on 2025-26 ATO rates (FBT 47%, statutory method 20%, Type 2 gross-up 1.8868, EV LCT threshold $89,332). Lease interest rate assumed at 9.5% p.a. This calculator is for general information only and does not constitute financial or tax advice. Consult a qualified financial adviser or salary packaging provider before entering a novated lease.