Novated Lease Calculator
Novated lease vs buying outright, including the electric car FBT exemption.
The Novated Lease vs Buy Calculator estimates the tax savings from packaging a car through your employer vs an outright purchase.
Who is it for? Salaried workers considering a new car, especially an eligible EV (FBT-exempt under $91,661).
Assumptions: Non-EVs use the Employee Contribution Method (ECM). Doesn't include residual value or lease fees.
Pre-tax cost (lease + running) x your marginal rate + 2% Medicare = tax saved. Non-EVs subtract FBT via the Employee Contribution Method. Eligible EVs under $91,661 are FBT-exempt until 31 March 2027.
Rates checked September 2026 against the ATO.
How a novated lease saves tax
A novated lease is a car lease your employer pays from your salary. The repayments and running costs (fuel or charging, insurance, rego, servicing) come out of your pay before tax, so you pay them with money that hasn't been taxed at your marginal rate.
The catch for most cars is fringe benefits tax (FBT). To avoid it, part of the cost is usually paid from your after-tax pay (the employee contribution method), which reduces the saving. The higher your income, the bigger the saving.
Electric cars and FBT
Eligible electric cars that cost less than the luxury car tax threshold for fuel-efficient cars ($91,661 in 2026-27) are exempt from FBT until 31 March 2027, so the whole cost can come from your pre-tax pay. That's why novated leases on EVs save so much more.
From 1 April 2027 the exemption narrows: EVs costing $75,000 or less stay fully exempt, while those between $75,000 and the luxury car threshold get a 25% discount on FBT instead. Plug-in hybrids lost the exemption from 1 April 2025, unless the lease was already in place.
Even when FBT is exempt, the car's taxable value is reported on your income statement, which can affect things like the Medicare levy surcharge, HECS repayments and government payments.
Frequently asked questions
Usually for an eligible electric car, especially on a higher income. For a petrol car the saving is smaller and the lease fees, interest and balloon payment can wipe it out. Compare the total cost with buying outright.
The car must cost less than the luxury car tax threshold for fuel-efficient vehicles, which is $91,661 in 2026-27.
From 1 April 2027, electric cars costing up to $75,000 stay fully exempt, and those above $75,000 but under the luxury car threshold get a 25% FBT discount.
A residual amount owed at the end of the lease, set by the ATO depending on the lease length. You pay it, refinance it, or trade the car in.