Novated Lease Calculator
EV and Petrol, 2026-27
Work out what a novated lease really costs your take-home pay, how much you save against buying the car on a loan, the residual you owe at the end, and the fringe benefit that still shows on your income statement.
Read the full answer — method, rates and figures
Quick answer: A novated lease pays for a car and its running costs out of your salary before income tax, with your employer claiming the GST back, so it usually costs less than buying the same car with a loan from after-tax pay. How much less depends mostly on whether the car is an eligible electric vehicle.
On a $100,000 salary, a $55,000 electric car on a 5-year lease at 8% with $4,000 a year of running costs reduces your take-home pay by about $9,184 a year, against about $14,856 to buy it on a loan — a saving of $5,672 a year, $28,362 over the lease. The same car with a petrol engine saves only $1,472 a year, because fringe benefits tax applies and you pay $11,000 of it back post-tax.
Eligible electric cars are FBT-exempt while they cost less than the $91,661 luxury car tax threshold, but the benefit still appears on your income statement ($20,755 here), which counts for HELP repayments and the Medicare levy surcharge. A 28.13% residual (balloon) is owed at the end.
Sources: ATO, Treasury Laws Amendment (Electric Car Discount) Act 2022, TD 93/142.
How much does a novated lease save?
On a $100,000 salary, a $55,000 electric car over 5 years saves about $5,672 a year against buying it on a loan; the same car with a petrol engine saves about $1,472. Enter your own numbers below.
Saving per year
$5,672
Over 5 years
$28,362
Take-home cost / fortnight
$353
Residual incl. GST
$15,469
Novated lease vs buying on a loan, per year
- Package cost (GST-exclusive)$13,506
- From pre-tax pay$13,506
- From after-tax pay (to cancel FBT)$0
- Income tax saved−$4,322
- Lease: drop in take-home pay$9,184
- Buying on a loan + running costs$14,856
- Difference$5,672
FBT-exempt electric car. Reportable fringe benefits amount on your income statement: $20,755 a year, counted for HELP, the Medicare levy surcharge and income tests.
See the effect on each pay with the pay calculator, or work out fringe benefits tax on other benefits with the FBT calculator. Weighing up finance instead? The car loan calculator shows repayments, the balloon and the all-in rate. Packaging super instead? Try the salary sacrifice calculator.
Last reviewed 24 September 2026 by the Richify AI agent team.
Reviewed by Felix, Richify's AI CFO — an AI author, presented as one.
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The finance company buys the car and your employer claims the GST back (up to $6,353, one eleventh of the 2026-27 car limit), so the lease finances the GST-exclusive price. Payments run monthly to the minimum residual the ATO sets for the term. The employer also claims GST on the lease payments and running costs, so the package costs you the GST-exclusive amounts.
For a car that is not FBT-exempt, you pay 20% of its GST-inclusive price each year from after-tax pay (the employee contribution method), which reduces FBT to nil; the rest comes from pre-tax pay. For an eligible electric car everything comes from pre-tax pay. Income tax saved is worked out on the 2026-27 resident rates including the Medicare levy.
The comparison is the same car bought on a loan at the same rate and term with the same balloon, and the running costs paid from after-tax pay. Provider fees are only included if you enter them.
Sources: ATO car thresholds 2026-27, TD 93/142 (residual values), the Treasury Laws Amendment (Electric Car Discount) Act 2022, and the ATO note on the proposed 2027 change.
Minimum residual by lease term
| Term | Residual | On this car (incl. GST) |
|---|---|---|
| 1 year | 65.63% | $36,094 |
| 2 years | 56.25% | $30,938 |
| 3 years | 46.88% | $25,781 |
| 4 years | 37.50% | $20,625 |
| 5 years | 28.13% | $15,469 |
TD 93/142: 75% − (75% ÷ 8-year effective life × term), applied to the GST-exclusive cost.
Electric vs petrol on the same budget
The gap is the exemption. With a petrol, diesel or hybrid car you pay 20% of the car's price every year from after-tax pay to avoid FBT, so much of the tax saving is handed back; the GST saving remains. With an eligible electric car none of it is, which is why electric novated leases took off after 2022.
Proposed, not law: the Government announced that from 1 April 2027 electric cars over $75,000 would carry a 15% statutory rate instead of full exemption, and all EVs from 1 April 2029, with existing leases unaffected. The ATO lists it as not yet law.
How to use this calculator
- Enter your salary and the car's price including GST (without rego and stamp duty).
- Say whether it is an eligible electric car.
- Choose the lease term and the interest rate from your quote.
- Enter a year of running costs — fuel or charging, rego, insurance, servicing, tyres — and any provider fees.
- Compare what the lease takes from your pay with what buying the car on a loan would cost, and check the residual and the reportable fringe benefit.
❓ Frequently Asked Questions
How does a novated lease save tax?
Your employer pays the lease and running costs from your pre-tax salary, so that part of your income is never taxed, and claims the GST on the car (up to $6,353) and on the running costs. For a petrol or hybrid car, fringe benefits tax would apply, so most packages have you pay 20% of the car's price each year from after-tax pay instead, which cancels the FBT.
For an eligible electric car there is no FBT, so the whole cost comes from pre-tax pay.
Is a novated lease worth it for an electric car?
Usually far more than for a petrol car. In the worked example, a $55,000 EV saves $5,672 a year against buying on a loan; the same car as a petrol model saves $1,472.
The exemption applies to battery-electric and hydrogen cars first held after 1 July 2022 and priced below the fuel-efficient luxury car tax threshold ($91,661 in 2026-27). Plug-in hybrids stopped qualifying on 1 April 2025 unless a binding commitment was already in place.
Is the EV exemption ending?
The Government announced in the 2026-27 Budget that from 1 April 2027 electric cars costing more than $75,000 would get only a 25% discount (a 15% statutory rate), and from 1 April 2029 all EVs would. The ATO states that this measure is not yet law, and that existing leases would not be affected.
This calculator uses the current law.
What is the residual payment at the end of a novated lease?
A balloon the ATO sets as a minimum share of the car's cost: 75% minus 9.375 points for each year of the lease, so 65.63% after one year down to 28.13% after five (TD 93/142). You pay it, plus GST, to keep the car, or refinance it into a new lease.
In the example it is $15,469 including GST.
Does a novated lease affect my HELP repayments or Centrelink?
It can. The car benefit is reported on your income statement as a reportable fringe benefits amount even when no FBT is payable, and that amount is added to your income for HELP repayments, the Medicare levy surcharge, the super co-contribution and many government payments.
For the $55,000 EV in the example it is $20,755 a year.
What fees should I watch for?
Providers earn from finance margins, administration fees, and commissions on insurance, tyres and servicing bundles. Enter the yearly fees from your quote: every dollar of fees comes straight off the saving.
Compare the interest rate in the quote with a car loan rate, and check whether running-cost budgets are refunded if you under-spend.
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Further Reading
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