The Finance AlgorithmTFA

Novated Lease Calculator

Calculator

Calculate tax savings from salary sacrificing a car through novated lease

Free to useNo data storedAI insightsUpdated: February 2026

A novated lease lets you salary sacrifice a car and running costs, reducing your taxable income. This calculator shows your potential tax savings and effective car cost.

Enter Your Details

Enter Your Details

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Your salary before tax

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ATO-set minimum residuals apply

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Real-World Examples

Mid-Income Novated Lease

$85,000 salary, $40,000 car over 4 years, 15,000km/year, $6,500 annual running costs.

Inputs:

salary:85,000car:40,000term:4running:6,500
Annual cost: ~$16,500 from salary. Tax saving: ~$4,800/year. Effective cost: $11,700/year vs $15,000+ buying normally.

Frequently Asked Questions

Glossary

Novated Lease
A three-way agreement between employee, employer, and finance company for salary packaging a car.
Salary Sacrifice
Paying for benefits from pre-tax salary, reducing taxable income.
Fringe Benefits Tax (FBT)
Tax on non-cash employee benefits. Novated leases use ECM or statutory method to minimize.
ECM (Employee Contribution Method)
Post-tax payments that reduce the FBT liability on a novated lease.

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026

How to Use
  1. Enter your annual gross salary
  2. Add the vehicle price and lease term
  3. Set your expected annual kilometers
  4. Include running cost estimates
  5. See your tax savings and net cost
Key Information
  • Pre-tax salary payments reduce your taxable income
  • Running costs (fuel, insurance, servicing) can be included
  • Higher income = bigger tax benefit
  • FBT (Fringe Benefits Tax) may apply but there are exemptions
Pro Tips
  • EVs under the luxury car limit have FBT exemption until 2025
  • Post-tax contributions reduce FBT
  • Compare the net cost to buying with a car loan
  • Check your employer offers novated lease arrangements
Avoid These Mistakes
  • Not accounting for Fringe Benefits Tax (FBT)
  • Assuming all the running costs are 'free' (they're salary sacrifice)
  • Not comparing to buying outright with a regular loan
  • Changing jobs during the lease (it can follow you, but complicates things)
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