Novated lease calculator

How a novated lease works

• You, your employer and a finance company sign a three-way agreement. Your employer pays the lease and running costs from your pay before tax.
• The finance company claims the GST on the car price (capped at $6,353), and GST is saved on most running costs.
• EVs: eligible electric cars are exempt from fringe benefits tax (FBT), so the whole cost can come from pre-tax pay. Petrol cars usually need some after-tax payments to avoid FBT.
• Your employer must agree to offer it. It is not a right.

Does it differ by state?

• No for income tax, the Medicare levy, FBT and GST: they are federal and the same everywhere.
• Yes for stamp duty, registration and CTP insurance. Some states give EVs a stamp duty discount; NSW has a proposed per-km EV charge. Check your state revenue office.

What can be included

• Lease payments, charging or fuel, insurance, rego and CTP, servicing, tyres and roadside assistance.
• Charging: home and public charging can be packaged. For home charging, the ATO rate is 5.47c per km (2026–27) unless you track the actual power used.
• Home charger: some providers will package one. Ask how it is taxed, as the car exemption may not cover it.

Catches to watch for

• Reportable fringe benefits. Even an FBT-free EV adds a grossed-up amount to your income for HELP/HECS repayments, the Medicare levy surcharge, child support, Child Care Subsidy and family payments. On a $60,000 EV that is about $22,600 a year.
• Changing jobs or redundancy. Your new employer doesn't have to take the lease. You may have to pay it from after-tax pay, or pay it out.
• Ending early. You owe the remaining balance plus GST and break fees, and you usually end up owning the car. That can be more than the car is worth.
• The balloon. At the end you owe the residual, paid from after-tax money. If the car is worth less (common with fast-changing EV prices), you cover the gap.
• Interest rate. Many quotes show a weekly cost but not the rate. Ask for it in writing, and compare a car loan and other providers.
• Fees and extras. Setup, monthly admin and early-ending fees, plus bundled add-ons like GAP or lease protection insurance and tyre packages. Ask which are optional.
• Running cost budgets. Providers often set budgets high. The unused money is yours but may only be refunded at the end of the FBT year (31 March) or the lease.
• Insurance. You pay the excess on a claim. If the car is written off and the insurer pays less than the payout, GAP insurance covers the difference; without it, you do.
• Super. Some employers work out super on your salary after the lease comes out. Check your employer's policy.
• Car discount. Make sure you get the fleet discount on the car, and compare the price with buying from the dealer yourself.
• Rule changes. The EV exemption is changing for new leases from 1 April 2027 (announced, not yet law). Existing leases keep their treatment.
• Used EVs qualify only if first sold after 1 July 2022 and always under the luxury car tax threshold. Plug-in hybrids no longer qualify for new leases.

Questions to ask before you sign

1. What is the interest rate, and the total of every fee?
2. What does it cost to end it early, or if I change jobs?
3. How are unused running cost funds refunded, and when?
4. Which insurance and add-ons are optional?
5. What is the balloon, and what will the car likely be worth then?

Comparing running costs? Try our EV vs petrol cost calculator, or compare with a loan in our EV car loan calculator.

Official sources

• ATO — Electric cars exemption — Which EVs are exempt from FBT, and that the benefit is still reportable.
• Budget 2026–27 — Tax reform — The announced changes to the EV exemption from 1 April 2027 and 1 April 2029.
• ATO — Tax rates for Australian residents — 2026–27 income tax brackets.
• ATO — FBT rates and thresholds — FBT rate, gross-up rates and the EV home charging rate.
• ATO — Luxury car tax thresholds — $91,661 for fuel-efficient cars in 2026–27.
• ATO — Car thresholds from 1 July — 2026–27 car limit ($69,883), which caps the GST saved on the price.
• ATO — Car leasing and FBT — Minimum residual values and the rules a lease must follow.