Novated lease calculator
Estimate lease payments, residual value, GST, ECM or eligible EV treatment, tax savings and the effect on take-home pay.
Important: This is an educational estimate, not a quote, financial advice or tax advice. It excludes provider-specific fees, payroll timing, HELP repayments, means-tested benefits, reportable fringe benefits and vehicle disposal outcomes unless shown.
What this novated lease calculator tells you
A novated lease is a three-way arrangement between you, your employer and a finance provider. Your employer makes deductions from salary and pays the packaged vehicle costs. The practical cost depends on the car, finance rate, residual, running-cost budget, GST treatment, FBT treatment and your tax position.
This calculator turns those inputs into a monthly take-home-pay estimate. It separates the lease payment, running costs and fees; shows the pre-tax and post-tax portions; calculates an estimated tax saving; and compares the result with privately funding the same vehicle at the same entered rate. Every result includes calculation steps.
How the novated lease estimate works
Remove estimated GST
If selected, the vehicle amount financed is the GST-inclusive price minus the smaller of price ÷ 11 or the entered GST credit cap. Eligible running costs are also reduced by their estimated GST component.
Vehicle GST = min(price ÷ 11, cap)Calculate payment and residual
The monthly payment amortises the financed amount down to the prescribed residual using the entered annual rate and term. The residual is shown with estimated GST payable at the end.
Payment = (PV − FV/(1+r)ⁿ) × r ÷ (1−(1+r)⁻ⁿ)Split pre-tax and post-tax
For a standard car, the ECM estimate assigns up to 20% of the entered vehicle base-value proxy to post-tax employee contributions. For a confirmed eligible EV, the model treats the packaged budget as pre-tax.
ECM ≈ min(package, vehicle price × 20%)Estimate take-home impact
Automatic mode compares 2026–27 resident income tax before and after the pre-tax deduction, then adds the entered Medicare levy rate. Manual mode applies one combined marginal percentage.
Net cost = pre-tax package − tax saved + post-tax ECMATO minimum residual percentages
A residual is not an optional extra payment created by the calculator. It is the amount deliberately left unpaid during the lease, so it reduces regular repayments and remains due at the end. The percentages below follow ATO guidance commonly applied to car leases with an eight-year effective life.
The result adds 10% GST to the modeled ex-GST residual. Your provider contract controls the actual payout figure, permitted end-of-term options and any fees.
| Lease term | Residual |
|---|---|
| 1 year | 65.63% |
| 2 years | 56.25% |
| 3 years | 46.88% |
| 4 years | 37.50% |
| 5 years | 28.13% |
Standard ECM vs eligible electric vehicle
Employee Contribution Method
The statutory formula generally uses a 20% rate. Providers often use post-tax employee contributions to reduce the taxable value of the car fringe benefit, with the remainder of eligible costs deducted pre-tax. This calculator models a full-year benefit and uses drive-away price as a simple base-value proxy.
- Pre-tax plus estimated post-tax ECM
- Actual FBT base value may differ
- Partial-year availability is not modeled
Eligible battery electric vehicle
An eligible zero or low emissions vehicle can be exempt from FBT if the statutory conditions are met, including the relevant luxury car tax threshold. Plug-in hybrid electric vehicles generally stopped qualifying for new exempt benefits from 1 April 2025, subject to transitional rules.
- Modeled as a fully pre-tax packaged budget
- Employee confirmation is required in the tool
- Reportable fringe benefit implications may remain
Example: $55,000 car over five years
Suppose an employee earns $100,000, chooses a $55,000 car, enters a 7.5% lease rate and budgets $8,000 a year for running costs plus $360 in fees. At five years, the residual percentage is 28.13%.
The calculator first estimates the vehicle GST benefit, then finances the reduced amount down to the residual. For a standard vehicle it estimates post-tax ECM at up to 20% of the vehicle price and treats the rest of the package pre-tax. For an eligible EV it models the package pre-tax without ECM. The exact result remains sensitive to provider pricing, actual eligible expenses and the employee’s tax circumstances.
- 1Check the quote inputsMatch the car price, rate, term, residual and all provider fees.
- 2Use a realistic running budgetA larger budget is not a saving; unused balances and reconciliation rules vary.
- 3Compare like with likeInclude the residual, private finance terms, insurance and ownership costs.
- 4Confirm tax consequencesCheck HELP, child support, family assistance and reportable fringe benefits separately.
Novated lease comparison checklist
Vehicle priceCompare the quoted purchase price with a cash or independently negotiated price.
Interest and feesAsk for the effective or comparison rate and every setup, monthly and end-of-term charge.
Residual and exit termsUnderstand the payout, refinance, sale and early-termination process before accepting.
Employment changesCheck what happens if you change employer, take unpaid leave or your employer ends packaging.
Tax and benefitsConsider HELP repayments, Medicare levy surcharge, child support and benefit income tests.
EV eligibilityVerify vehicle type, first retail sale date, LCT threshold and PHEV transitional conditions.
Official rules used by this calculator
The default tax year and thresholds are dated so they can be reviewed when rules change. These Australian Taxation Office pages are the primary references behind the model.
Novated lease calculator FAQ
What is a novated lease?
A novated lease is a three-way vehicle finance and salary-packaging arrangement between an employee, employer and finance provider. The employer makes payroll deductions and pays packaged costs while the employee remains responsible under the arrangement.
How accurate is this novated lease calculator?
It is a transparent educational estimate using the values you enter. A provider quote can differ because of purchase price, finance method, fees, payroll dates, GST credits, base value, actual expenses and personal tax circumstances.
What is the residual value on a novated lease?
The residual is the amount left unpaid at the end of the finance term. This calculator applies the ATO minimum percentages for one-to-five-year car leases and displays the modeled residual including estimated GST.
What is the Employee Contribution Method?
Under the Employee Contribution Method, an employee makes post-tax contributions toward the car benefit. Those contributions can reduce the taxable value used for FBT. This tool uses a simplified full-year statutory-method estimate, not an employer FBT return.
Are electric vehicles exempt from FBT?
Some zero or low emissions vehicles can qualify when all statutory conditions are met, including the relevant luxury car tax threshold. Plug-in hybrid vehicles generally ceased qualifying for new exempt benefits from 1 April 2025, subject to transitional rules.
Does a novated lease reduce taxable income?
Eligible pre-tax salary-packaged deductions can reduce taxable salary. Standard vehicles commonly also require a post-tax contribution. Other income tests and reportable fringe benefit rules may use different amounts, so a lower taxable salary does not automatically improve every tax or benefit outcome.
How does the calculator estimate GST?
It estimates vehicle GST as one-eleventh of the GST-inclusive price, capped at the entered limit, and applies one-eleventh to the entered GST-eligible share of running costs. The result assumes the relevant benefit is passed through; actual invoicing and credits depend on the arrangement.
Is the annual benefit the same as guaranteed savings?
No. It compares the modeled take-home cost with privately financing the same car at the same interest rate and term, plus gross running costs. It excludes the residual from both annual paths and does not guarantee a saving against cash purchase or another loan.
What happens if I leave my employer?
The salary-packaging arrangement may stop, but the finance obligation normally continues. Options can include transferring the novation to a new participating employer, paying the lease privately or ending the lease under the provider contract. Check this before signing.
Are running-cost budgets tax savings?
No. They are estimates of costs you expect to incur. Overbudgeting increases payroll deductions and underbudgeting can leave a shortfall. Provider rules determine how balances are reconciled.
Does the calculator include HELP or other income tests?
No. It does not model HELP repayments, Medicare levy surcharge, child support, family assistance, superannuation effects or other means tests. Reportable fringe benefits can affect some of these calculations even when an EV benefit is exempt from FBT.
Is this financial or tax advice?
No. It is general educational information. Obtain a written quote and seek advice suited to your employment, tax position and contract before making a decision.