Monthly Lease Cost
$1,569.23
Annual Tax Saving
$7,750.18
Total Saving (5yr)
$38,750.91
Marginal Rate
32.0%
FBT Status
| Novated Lease | Buying Outright | |
|---|---|---|
| Annual Vehicle Cost | $18,830.70 | $18,075.00 |
| Paid From | Pre-tax income | After-tax income |
| Pre-Tax Equivalent Cost | $18,830.70 | $26,580.88 |
| Annual Saving | $7,750.18 per year | |
| Total Saving Over 5 Years | $38,750.91 | |
How Novated Leases Work
A novated lease is a three-way agreement between you, your employer, and a finance company. Your employer deducts lease payments and running costs from your pre-tax salary (salary sacrifice), reducing your taxable income and the tax you pay.
Fringe Benefits Tax (FBT)
For non-exempt vehicles, the pre-tax component attracts FBT, which is managed through the Employee Contribution Method (ECM) -- a post-tax contribution to reduce the FBT liability to nil. This is why costs are split between pre-tax and post-tax.
Electric Vehicle Exemption
From 1 July 2022, eligible electric vehicles, plug-in hybrids (first used before 1 April 2025), and hydrogen fuel cell vehicles are FBT-exempt. This means the full cost can be salary sacrificed from pre-tax income, maximising savings.
Who benefits most?
Novated leases deliver the biggest savings for higher income earners in the 32.5% or 37% marginal tax brackets. The higher your marginal rate, the more you save by paying vehicle costs from pre-tax income. Electric vehicle owners benefit even further with the FBT exemption.
Estimates Only: Actual lease quotes will vary based on credit assessment, interest rates, and specific running costs. Running costs are estimated. Contact a novated lease provider for an exact quote.
Disclaimer: This calculator provides estimates based on current ATO rates and thresholds for the 2024–25 financial year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified tax agent before making financial decisions. Read our terms
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