Estimate how a novated lease changes your take-home pay and how much you save in 2026–27, for an electric car or a petrol car.
Key facts
- A novated lease pays for a car from your pre-tax salary; for a petrol car, 20% of the car's price a year is paid from after-tax pay to remove fringe benefits tax.
- Eligible electric cars under the fuel-efficient luxury car tax threshold ($91,661 in 2026–27) are exempt from FBT, so the whole cost can come from pre-tax pay.
- The financier claims back GST on the price, up to $6,353 (1/11 of the $69,883 car limit); GST on running costs is claimed too.
- The ATO minimum residual (balloon) is 46.88% of the financed amount for a 3-year lease and 28.13% for 5 years.
- The EV exemption continues in full to the end of March 2027; the Budget proposed changes from 1 April 2027 (not yet law) that wouldn't affect existing leases.
How it's worked out
- The financier claims GST on the price (up to $6,353); the rest is financed, with the ATO minimum residual for the term.
- Lease payments are monthly in advance at your interest rate; with running costs, they're paid from your salary package and the GST is claimed back.
- Electric (FBT-exempt): everything comes from pre-tax pay. Petrol: 20% of the price a year comes from after-tax pay (the employee contribution method), so there's no FBT.
- The saving compares the fall in your take-home pay with paying the same lease payments and running costs from after-tax pay, at 2026–27 tax rates with the Medicare levy.
Saving a year by car price
| Car price | Electric (FBT-exempt) | Petrol (with ECM) |
|---|---|---|
| $40,000 | $5,181.39 | $2,126.84 |
| $55,000 | $6,408.50 | $2,208.50 |
| $70,000 | $7,636.57 | $2,291.11 |
| $85,000 | $8,986.39 | $2,495.48 |
$100,000 salary, 3 years at 8%, $5,000 a year running costs.
Saving a year by salary
| Salary | Electric (FBT-exempt) | Petrol (with ECM) |
|---|---|---|
| $60,000 | $6,607.67 | $2,287.37 |
| $80,000 | $6,437.37 | $2,208.50 |
| $100,000 | $6,408.50 | $2,208.50 |
| $140,000 | $6,758.50 | $2,558.50 |
| $200,000 | $8,276.58 | $2,997.25 |
$55,000 car, 3 years at 8%, $5,000 a year running costs.
ATO minimum residual values for cars
| Lease term | Residual, % of amount financed |
|---|---|
| 1 year | 65.63% |
| 2 years | 56.25% |
| 3 years | 46.88% |
| 4 years | 37.50% |
| 5 years | 28.13% |
Not included: lease establishment and management fees, stamp duty and rego in the base value, HECS-HELP and the Medicare levy surcharge, partial years and the luxury car GST rules on lease payments. General information, not financial advice; compare provider quotes.
Common questions
How much does a novated lease save?
It depends on your tax rate and the car. With a $100,000 salary, a $55,000 electric car over 3 years at 8% and $5,000 a year of running costs, the saving is about $6,408.50 a year compared with paying the same costs from after-tax pay.
Is a novated lease worth it for a petrol car?
Usually less so. You pay 20% of the car's price each year from after-tax pay to remove FBT, which cuts the saving; the result depends on your income and running costs.
Do electric cars still get the FBT exemption?
Yes. Battery electric and hydrogen fuel cell cars first held and used from 1 July 2022, on which luxury car tax was never payable (fuel-efficient threshold $91,661 in 2026–27), are exempt. Plug-in hybrids aren't eligible from 1 April 2025, apart from some existing arrangements.
Does a novated lease affect Centrelink or HECS?
The car's grossed-up taxable value is a reportable fringe benefit even when it's FBT-exempt, so it counts in income tests such as HECS-HELP repayments, Family Tax Benefit and the Medicare levy surcharge.
What happens at the end of the lease?
You pay the residual (balloon), refinance it, or sell or trade in the car. The residual follows the ATO minimum for the term.
See also the salary sacrifice calculator and pay calculator.
Sources: ATO FBT rates and thresholds, car thresholds for 2026–27, luxury car tax thresholds, TD 93/142 residual values and electric cars exemption and electric car discount. Checked 22 October 2026.