Novated Lease Calculator Australia

About the Novated Lease Calculator

A novated lease lets you pay for a car (finance and running costs) out of your salary before tax, via an arrangement between you, your employer and a finance company. This estimates the total package cost, the tax saving from paying part of it pre-tax, and your resulting net annual cost.

How it works

It calculates the lease finance payment using the vehicle price minus a residual (balloon) value based on the ATO's minimum residual value guide for your lease term, amortised at your lease rate. That's added to your estimated running costs for the total package cost. Under the most common real-world structure — the Employee Contribution Method (ECM) — you make a post-tax contribution equal to the statutory FBT taxable value (20% of the vehicle's price), which reduces the employer's FBT liability to zero. The remaining package cost is deducted pre-tax, and the tax you'd otherwise have paid on that amount is your estimated saving.

Assumptions and behaviour

• Uses the statutory formula method for FBT (a flat 20% of the vehicle's base value), the method almost all novated lease providers use for simplicity.
• Assumes the Employee Contribution Method (ECM) is used to reduce FBT to zero — the standard approach in the Australian novated lease industry.
• Residual values follow the ATO's published minimum guide by lease term — actual leases can't legally set a lower residual, though some set it higher.
• The marginal tax rate you select already includes the 2% Medicare levy.

Limitations

• This is a simplified estimate, not a finance quote — actual novated lease providers add their own management fees, and GST treatment can shift the numbers.
• Doesn't model electric vehicle FBT exemptions, which can remove the FBT/ECM requirement entirely for eligible EVs under the current threshold.
• Doesn't account for the Medicare levy surcharge, HECS/HELP repayment thresholds, or family tax benefit effects that reportable fringe benefits can trigger — all of which a lease provider's tax specialist should walk you through.

Privacy

The calculation runs entirely in your browser. Nothing is uploaded or stored.