Novated lease calculator
Estimate the income tax you could save by paying car costs from your pre-tax salary. Compare an FBT-exempt electric vehicle with a petrol or diesel car.
- EV FBT exemption
- Employee contribution method
- 2026–27 rates
Your estimated savings
Income tax saved per year
$0
| Paid from pre-tax salary | |
| Employee contribution (post-tax) | |
| Tax saving | |
| Real out-of-pocket cost |
Excludes GST savings, residual (balloon) payment and finance charges. Check the lease terms with your provider.
How novated lease tax savings work
A novated lease lets you pay for a car and its running costs from pre-tax salary. For eligible electric cars the benefit is exempt from fringe benefits tax, so the whole amount comes off your taxable income. For petrol and diesel cars the statutory formula treats 20% of the base value as a fringe benefit. To avoid FBT, you make an after-tax contribution (the ECM) equal to that amount, and the rest is paid pre-tax.
The saving is your marginal tax rate plus Medicare levy times the pre-tax amount. Higher earners benefit most.
Frequently asked questions
Are electric cars exempt from FBT?
Eligible zero or low emission cars (battery electric and hydrogen fuel cell vehicles) that were first held and used after 1 July 2022 and are below the luxury car tax threshold for fuel-efficient vehicles are exempt from FBT. Plug-in hybrids lost this exemption from 1 April 2025, except under commitments that existed before then.
What is an employee contribution (ECM) on a novated lease?
For petrol and diesel cars the statutory formula treats 20% of the car's base value as the taxable fringe benefit. Employees usually make an after-tax contribution toward the lease so that the employer owes no FBT. This calculator models that approach.
Does a novated lease also save GST?
Often yes, because the lease provider can claim GST credits on the vehicle and running costs. This calculator shows only the income tax saving, so your total saving may be higher.
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