Novated lease calculator

Novated leases in plain English

• The mechanics: a three-way deal between you, your employer and a leasing company. Lease payments and running costs come out of your pay before (and partly after) tax — one bundled deduction covers the car, fuel/charging, rego, insurance and servicing.
• Why the EV exemption changes everything: since 2022, eligible electric vehicles under the luxury-car-tax threshold pay no Fringe Benefits Tax — so the entire package can be salary-sacrificed pre-tax. For a 30–39% marginal-rate earner, that routinely undercuts a car loan by thousands a year, which is why EV novation has boomed.
• Petrol/diesel cars use ECM: the Employee Contribution Method offsets FBT by making you pay roughly 20% of the car's value per year post-tax; only the remainder is pre-tax. The benefit shrinks — sometimes to nothing — so run the numbers before signing.
• The residual (balloon): ATO minimum residuals (~46.9% after 3 years) fall due at term end. Cars that hold value well can leave you ahead; overpriced packages hide costs here.
• Watch for: management fees, inflated insurance, "budget surplus" reconciliation, and quotes that compare against a dealer-rate loan you'd never take. Get two competing quotes and check the interest rate they're actually charging.
• Job change? The novation ends with your employment — the lease follows you as a personal obligation until a new employer takes it on.

Weigh the whole package against your real take-home with the pay calculator, and if you're new to the country, note that novated leases generally require permanent employment — see finding a job in Australia first.