Electric cars are FBT-exempt
Novated lease calculator
See the real cost of leasing a car through your salary: pre- and post-tax deductions, GST and FBT, the balloon at the end, and how it compares with buying outright.
- Same engine as the pay calculator
- Private — runs in your browser
Your take-home falls by $457.03 per fortnight, for the car and all running costs
Saving vs buying outright $10,611 over 3 years, including the residual
| Pre-tax deduction | $672.11 / fortnight |
|---|---|
| Post-tax deduction (ECM) | $0.00 / fortnight |
| Finance repayment | $1,059 / month |
| GST saved on the car | $5,273 |
| FBT taxable value | $11,600 (exempt) |
| Residual at end of lease (incl. GST) | $27,190 |
| Reportable fringe benefits | $21,887 |
The reportable fringe benefit isn't taxed, but it counts as income for HECS-HELP repayments, the Medicare levy surcharge, Division 293 and Centrelink tests.
Electric car FBT exemption applies — the whole lease can be paid from pre-tax salary.
Lease vs buy, over 3 years
| Novated lease | Buy outright | |
|---|---|---|
| Car | Paid pre-tax + residual $27,190 | $58,000 upfront |
| Running costs | Pre-tax, GST-free | $15,450 after tax |
| Cost to your take-home | $35,648 | $73,450 |
| Total cost to own | $62,839 | $73,450 |
Buying outright ignores the interest you'd earn on the cash, and a car loan would add interest. Compare quotes: lease rates and fees vary widely.
Frequently asked questions
Are electric cars exempt from FBT on a novated lease?
Yes. Zero or low emission cars first held after 1 July 2022 are FBT-exempt if their value is under the luxury car tax threshold for fuel-efficient vehicles ($91,661 in 2026–27). Plug-in hybrids lost the exemption from 1 April 2025, except under commitments made earlier. The Government has announced a phase-down for new commitments from 1 April 2027: a $75,000 cap, then a partial discount. It isn’t law yet, and existing leases aren’t affected.
What is the employee contribution method?
For a petrol or hybrid car you pay part of the lease from your after-tax pay, usually enough to reduce the car’s FBT taxable value (20% of its cost) to zero. The rest is deducted pre-tax. Without it, your employer’s FBT bill is charged to your package, and that usually costs more.
Does a novated lease affect my HECS or Medicare levy surcharge?
It can. An FBT-exempt electric car still creates a reportable fringe benefits amount: its taxable value grossed up by 1.8868. That amount is added to your income for HELP repayments, the Medicare levy surcharge, Division 293 and family payments.
What is the residual?
The balloon payment due at the end of the lease. The ATO sets minimums by term: 65.63% after one year, down to 28.13% after five. You can pay it, refinance it or sell the car. GST is payable on top, and you pay it from after-tax money.
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