Novated lease calculator Australia
See what a car actually costs from your pay — finance, fuel, servicing, tyres, insurance and rego bundled, with the tax saved before it hits your account.
After tax savings — includes the car, fuel, servicing, tyres, insurance and rego.
Estimate only, using 2025-26 resident tax rates, ATO minimum residuals and the statutory-formula FBT method. It is not tax advice — your employer's arrangement, provider fees and personal circumstances change the result.
How a novated lease actually works
A novated lease is a three-way agreement between you, your employer and a leasing provider. Your employer deducts the car's cost from your salary and pays the provider directly, so the money never passes through your taxable income. That's where the saving comes from — you're buying a car with pre-tax dollars.
The lease bundles the finance repayment with fuel or charging, servicing, tyres, registration and comprehensive insurance into one deduction. GST also comes off the purchase price and off your running costs, which is a saving you can't get buying privately.
A worked example: $55,000 car on a $120,000 salary
Take a $55,000 petrol SUV, a five-year lease, 15,000 km a year and an 8.5% rate. The ATO minimum residual at five years is 28.13%, so roughly $15,470 is deferred to the end and the lease is written over the rest.
Bundled running costs — fuel, servicing, tyres, insurance and registration — add around $6,500 a year on those kilometres. Add the finance component and the package sits near $16,000 a year.
About $5,000 of that comes out post-tax as the employee contribution to cancel FBT (20% of the car's value), and the remainder comes out pre-tax. At a $120,000 salary the marginal rate is 39% including the Medicare levy, so the pre-tax portion costs you roughly $6,700 less in take-home pay than paying the same amount from a normal salary — before the GST saved on the purchase price and the running costs.
Change the salary, price, term or kilometres in the calculator above and the whole chain recalculates. Every figure is an estimate — your provider's actual quote will vary with their management fee, insurance premium and the rate they secure.
FBT, the residual, and the two things people get caught by
Because you get private use of a car your employer pays for, Fringe Benefits Tax applies. Most packages neutralise it using the Employee Contribution Method: a portion equal to 20% of the car's value each year is taken from your post-tax pay instead of pre-tax, cancelling the FBT liability. Our calculator applies exactly this.
Eligible battery-electric and plug-in hybrid vehicles under the luxury car tax threshold for fuel-efficient vehicles are exempt from FBT, so the entire package comes from pre-tax salary. That exemption is why an EV on a novated lease can cost less per fortnight than a cheaper petrol car.
The second catch is the residual — a balloon set by the ATO as a minimum percentage of the purchase price, from 65.63% at one year down to 28.13% at five. At the end of the lease you pay it out, refinance it, or sell the car and settle. If the car's market value has fallen below the residual, the gap is yours.
Is a novated lease worth it?
Generally yes if you earn above about $90,000, are a permanent employee whose employer offers salary packaging, and drive enough for the bundled running costs to be worth it. The higher your marginal rate, the larger the saving.
Generally no if your income sits in the 16% bracket, your employment is short-term or contract, or you'd be buying a car you don't need purely for the tax outcome. A lease is a fixed commitment — breaking it early is expensive.
Also compare against a chattel mortgage if you're a sole trader or run a business, since the deductibility works differently.
Where most people lose money on a novated lease
The tax structure gets all the attention, and the purchase price gets none. Novated providers frequently source the car through a single dealer relationship at close to retail — so a genuine tax saving is quietly handed back in an inflated drive-away price.
Book a Test Drive works the other side of that equation. We source the vehicle independently across the national dealer network at broker pricing, then the lease is written over the lower amount. Same tax treatment, smaller number underneath it.
Novated lease calculator FAQs
How is a novated lease calculated?
The provider bundles the finance repayment on the car (less an ATO minimum residual) with fuel, servicing, tyres, insurance and registration into one annual figure. Most of that is deducted from your pre-tax salary, and a portion equal to 20% of the car's value is taken post-tax to offset FBT. Your saving is the income tax you no longer pay on the pre-tax portion.
How much can I save with a novated lease?
It scales with your marginal tax rate. On a $55,000 car at a $120,000 salary, the typical advantage over a post-tax car loan is a few thousand dollars a year, mostly from pre-tax deductions and GST savings on the purchase price and running costs.
What is the residual on a novated lease?
The ATO sets minimum residuals by term: 65.63% for one year, 56.25% for two, 46.88% for three, 37.50% for four and 28.13% for five. At the end of the lease you pay it out, refinance it, or sell the car and settle the difference.
Are electric cars FBT-free on a novated lease?
Eligible battery-electric vehicles priced under the luxury car tax threshold for fuel-efficient vehicles are exempt from FBT, so the entire package can come from pre-tax salary. That is why an EV often costs less per fortnight than a cheaper petrol car on the same lease.
Do I need my employer's approval for a novated lease?
Yes. A novated lease is a three-way agreement between you, your employer and the leasing provider, so your employer must offer salary packaging and agree to the novation deed.
Is a novated lease worth it on a $100,000 salary?
Usually yes, provided you are a permanent employee and would be buying the car anyway. Above roughly $90,000 the 30%-plus marginal rate makes the pre-tax deduction meaningful. On lower incomes the saving shrinks quickly.
Can I novate a used car?
Yes, most providers allow used vehicles up to around 7–12 years old at the end of the lease, and some allow a sale-and-leaseback of a car you already own. Interest rates on used vehicles are typically higher.
Turn the estimate into a real novated quote.
We compare novated providers and lenders, confirm your employer's arrangement, and source the car itself at broker pricing — the two halves most people do separately.