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Estimate the pre-tax deduction, post-tax contribution, annual cash cost and residual for a novated car lease in 2026–27. This independent, provider-neutral calculator compares the same car with and without the EV FBT exemption under the assumptions shown.
Gross salary before tax, excluding super.
GST-inclusive. Under a novated lease you don't pay the GST, up to a $6,353 credit.
Model residual benchmark for 5 years: 28.13% of the GST-reduced amount financed. ATO residual guidance uses the car's cost, so this model amount is not a verified ATO minimum for your lease.
Running costs: fuel or charging, rego, insurance, servicing and tyres (see annual car registration costs by state). Estimate the energy part with the petrol and EV charging cost calculator. Lease quotes bundle these. The entered finance rate and running-cost budget are assumptions, not market quotes.
Leave blank to use the model benchmark. The input is a percentage of the GST-reduced financed amount, so a quote using the car's cost has a different basis. A bigger balloon means smaller payments now and a larger lump sum at the end.
Estimated recurring cash saving with the lease
$2,153 a year
≈ $10,763 in recurring cash flow over 5 years, excluding final balloon payments. This illustration holds the current year's tax and FBT rules and all inputs unchanged. Future rule changes can alter the outcome.
Based on a petrol or diesel car, where the post-tax employee contribution reduces the car benefit's taxable value. Tick the electric-car option to model an eligible exempt car.
For a non-exempt car, $11,000 of the package is paid post-tax under the employee contribution method. FBT is reduced to nil only when the contribution covers the full taxable value; any shortfall remains taxable. Cash contributions paid to the employer include GST, which is included in the package cost. These estimates exclude FBT payable on a shortfall. Only the pre-tax portion saves income tax.
A residual of $14,065 (plus GST) is payable to own the car at the end. The buy and lease balloons use the same percentage on different cost bases, so their amounts differ. Neither final balloon nor its GST is included in this recurring cash-flow comparison. Packaged benefits create a reportable fringe benefits amount that can affect HELP repayments, the Medicare levy surcharge and family payments.
This illustration uses the inputs above: a $55,000 car on a $100,000 salary, a 5-year term, an entered finance rate of 8% and $5,500 annual running costs. Both scenarios use 2026–27 rates and the same residual setting.
| Modelled amount | Without EV exemption (ECM) | With EV exemption |
|---|---|---|
| Pre-tax deduction | $5,125 | $15,125 |
| Post-tax contribution | $11,000 | $0 |
| Residual before GST | $14,065 | $14,065 |
| Income tax and Medicare saved | $1,640 | $4,840 |
| Annual cash difference vs buying | $2,153 | $6,353 |
These are model estimates, not lease quotes. The EV column assumes eligibility is established. Both use resident rates, the tax-free threshold, the standard work-expense deduction where applicable, private hospital cover and no HELP debt.
The model treats the drive-away price as the full-year statutory FBT base and all running costs as GST-creditable. Actual registration fees and insurance charges can have different GST treatment. It applies the residual percentage to the GST-reduced financed amount; ATO guidance refers to the car's cost, so a quoted residual can differ. Fees, GST on employee contributions and lease charges, FBT payable on any employee-contribution shortfall, FBT-year timing and reportable-benefit income-test effects are not modelled. The annual cash comparison excludes the final balloon payment.
The estimate depends on the car's FBT treatment, taxable income, finance rate, fees, running costs and residual. An eligible EV can remove FBT on the car benefit, but that does not establish the total cost or make a lease cheaper in every case. The comparison above shows the effect under a common set of model assumptions.
An eligible battery electric or hydrogen fuel-cell car must meet the first-held-and-used condition from 1 July 2022 and the statutory test that no LCT became payable on a prior supply or importation. The published fuel-efficient LCT threshold is $91,661 for the current threshold year; drive-away price alone does not determine eligibility. The benefit can still affect reportable fringe benefits and separate income tests. Plug-in hybrid benefits from 1 April 2025 require all transitional conditions described below.
The balloon payment, also called the residual, is the lump sum left owing at the end of the lease. ATO guidance gives minimum percentages of the car's cost: 65.63% after 1 year, 46.88% after 3 and 28.13% after 5. This model applies those percentages to a GST-reduced financed amount, so its balloon is an estimate on a different basis. End-of-term purchase, refinancing or sale options and GST payable depend on the agreement.
Those are minimums, not fixed values. Financiers often quote a residual above the ATO floor, which lowers the payments coming out of your salary and raises the lump sum owed at the end. The calculator above takes the balloon percentage as an input, so you can enter the residual from a real quote instead of assuming the minimum. Raising it doesn't make the car cheaper. It moves cost from your fortnightly package to a single payment years away, and you pay interest on the deferred balance in the meantime.
The risk worth naming: if the balloon is set high and the car is worth less than the residual at the end of the term, you are still liable for the full amount. That's the trade-off a low monthly payment can hide.
Tax figures use 2026–27 resident rates; FBT and GST settings follow the ATO pages below. Compare against a real quote before signing.
This calculator is not intended to be relied on for the purposes of making a decision in relation to a financial product. Before you make a financial decision, consider obtaining advice from someone who holds an Australian Financial Services Licence. We do not, and we cannot advise you.
A novated lease is a three-way agreement between an employee, an employer and a finance company. The employer takes on the agreed lease obligations during a full novation, funded through salary deductions. A pre-tax deduction and a post-tax contribution have different tax treatment.
Because the employer is the one paying, the car is a fringe benefit. For petrol cars the FBT is usually cancelled by a post-tax employee contribution; for eligible electric cars the benefit is FBT-exempt, which is what makes EV novated leases so tax-effective.
This model assumes GST credits reduce the financed price and running-cost budget. Actual credits, GST on lease charges and the amounts passed through to the employee depend on the arrangement.
A novated lease is an agreement between an employee, an employer and a finance company. Under a full novation, the employer takes on lease obligations while the arrangement continues and payments are funded through agreed salary deductions. The pre-tax and post-tax split depends on the benefit's FBT treatment. The ATO employers guide explains novated car leases and salary sacrifice.
A pre-tax deduction reduces taxable salary under an effective salary sacrifice arrangement. A post-tax employee contribution is paid from after-tax income and reduces the car benefit's taxable value. Salary-sacrificed amounts cannot also count as employee contributions. This calculator uses the 20% statutory formula with ECM for a non-exempt car; it does not model the operating-cost method. See the ATO car benefit guidance and FBT legislation, sections 9 and 10.
The exemption can apply to a battery electric or hydrogen fuel-cell car first held and used on or after 1 July 2022, provided for private use by a current employee or their associate, where no luxury car tax became payable on a supply or importation before the car benefit is provided. A drive-away price alone does not establish that test. See the ATO electric car conditions and FBT legislation, section 8A.
Plug-in hybrid benefits provided on or after 1 April 2025 are generally outside the exemption. The transition requires an exempt car benefit before the cutoff, a pre-cutoff commitment covering the relevant period and no new commitment on or after the cutoff covering that time. A signed agreement alone is insufficient. All conditions in Schedule 2 item 5 of the Electric Car Discount Act must be met.
It is the amount remaining at the end of the lease, separate from regular deductions. The ATO residual guidance gives a minimum of 28.13% for a five-year car lease and 65.63% for a one-year lease. The guidance uses the car's cost; this simplified model uses its GST-reduced financed amount. The quote determines the actual residual and GST payable. A higher residual defers more cost and can lower regular payments without reducing the total cost.
Under a full novation, the lease obligations revert to the employee when employment ends. A new employer may agree to a new novation; transfer is not automatic. Payments and any termination costs depend on the contract. The ATO employers guide describes this reversion. A new commitment may also affect a plug-in hybrid's transitional exemption.
It can. An exempt EV can still count towards reportable fringe benefits, which feed into separate income tests. Lower taxable salary does not by itself establish lower HELP repayments or Medicare levy surcharge. This calculator excludes those reportable-benefit effects. See the ATO electric car reporting guidance.
Comparing provider quotes is your choice. This calculator does not recommend or rank providers or products. Differences in finance rates, fees, running-cost budgets, GST treatment and residuals can change the result. Entering quote assumptions allows a model comparison; the estimate does not replace the contract.
For the wider pay comparison, use the salary packaging calculator. The FBT calculator explains car-benefit valuation, and the car expenses calculator compares work-related deduction methods.
Estimates only. Not financial or tax advice. Full disclaimer for your rights and our limitations of liability.
This calculator exists to show you the arithmetic. It applies published Australian rates, thresholds and formulas to the numbers you enter and shows the working, so you can check it. That is all it does — it produces a number and describes what the number is. It does not recommend anything and it holds no opinion about any financial product.
What can move this result
This calculator is not intended to be relied on for the purposes of making a decision in relation to a financial product. Before you make a financial decision, consider obtaining advice from someone who holds an Australian Financial Services Licence. We do not, and we cannot advise you.