Pay calculator / novated lease calculator
Novated lease calculator for Australia (2026-27, EV exemption included).
Not “how much tax you save” - what the car actually costs your take-home pay, against buying and running the same car with your own money. Including the two things the lease companies' calculators leave out: the reportable amount on an exempt EV, and the residual at the end.
Novated lease calculator
Estimates for 2026-27. General information only, not tax advice.
link.com.au
What we've assumed
- Lease payments at 8-10.5%
- $9,639 - $10,530
- Registration and CTP Varies by state - NSW and Victoria sit either side of this.
- $1,100
- Comprehensive insurance Scales with the car's price. Your age and postcode move it more than we can guess.
- $1,860
- Fuel 15,000 km at 8 L/100 km and $1.90 a litre.
- $2,280
- Servicing and tyres Logbook servicing plus a set of tyres amortised over the term.
- $1,000
- Package a year
- $15,879 - $16,770
Nobody can tell you the rate you'll be offered - it turns on your credit file, your employer's arrangement and the financier's book that week - so this shows a range rather than pretending to a number. The figures below use the dearer end (10.5%), so a real quote should come back better than this rather than worse. Financed on $50,000 after the $5,000 of GST the financier claims back, with the ATO minimum residual of $15,472 at the end. The running costs are typical figures for a car of this price, not quotes - change the kilometres above if yours is different, and treat every line as a starting point rather than an answer.
Novated versus buying it yourself
$2,883 a year
The same car costs you $13,887 of take-home pay a year packaged, against $16,770 if you bought and ran it with your own after-tax money. Over a five-year lease that's $14,416.
Income tax saved
$1,359
GST you don't pay
$1,525
Marginal rate
30%
Want a real number instead of a range?
We can send these figures to LINK's leasing partner and have them price this exact car properly - the rate, the residual and the fees, on your salary. You've already entered everything they need.
Bring the quote back and run it through the “I have a quote” side of this calculator. It has to survive the same numbers as anyone else's.
| Lease payments + running costs, estimated | $16,770 |
| Less GST the employer claims back | -$1,525 |
| Packaged cost | $15,246 |
| Taken from your PRE-tax pay | $4,246 |
| Taken from your POST-tax pay (ECM) | $11,000 |
| Income tax you no longer pay | -$1,359 |
| Real cost to your take-home pay | $13,887 |
→How this changes your take-home pay
Your pay packet goes from $3,503.08 to $2,968.96 a fortnight. That $534.12 difference is what the car actually costs you - against $645.01 a fortnight if you bought and ran the same car with your own after-tax money.
| Per fortnight | Now | With the lease |
|---|---|---|
| Gross salary | $4,615.38 | $4,615.38 |
| Lease, from pre-tax pay | - | -$163.30 |
| Taxable income | $4,615.38 | $4,452.09 |
| Income tax | -$1,020.00 | -$971.01 |
| Medicare levy | -$92.31 | -$89.04 |
| Lease, from post-tax pay (ECM) | - | -$423.08 |
| Take-home pay | $3,503.08 | $2,968.96 |
- Taxable income falls from $120,000 to $115,754.
- Employer super is unchanged at $14,400 - this assumes your employer keeps paying it on your full salary rather than the reduced one, which is the usual arrangement but is worth confirming, because not every employer does.
Open this in the full pay calculator → to add super sacrifice, a spouse, dependants or private hospital cover. The lease carries across.
ECM: $11,000 from post-tax pay
Without a contribution, FBT of $10,755 would apply. The employee contribution method cancels it by paying the statutory taxable value - 20% of the car's $55,000 base value, or $11,000 - out of post-tax pay. You pay $11,000, and the FBT drops to nil. That post-tax slice is the part that gets no tax benefit, which is why a cheaper car packages proportionally better.
Residual at 5 years: about $15,472
The ATO sets a MINIMUM residual for each term - 28.13% over 5 years - and a lease cannot write the car down faster than that. A financier may set a higher residual; it may not go lower, because a lease that depreciates the car faster than this schedule stops being a lease. This estimate applies the percentage to the $55,000 you entered, so it will differ from a quote, which applies it to the car's cost rather than to a drive-away price with on-roads in it. The residual is not in the yearly figures above - it falls due at the end.
Estimates for 2026-27, for an Australian resident, using the statutory formula (20% of base value), the 47% FBT rate and the 2.0802 type 1 gross-up. Lease payments and running costs come from YOUR quote - this models the tax treatment of those numbers, not the finance: interest rate, residual value and the lease company's fees are set by the financier and change the answer materially. The residual (balloon) at the end of the term is not included above and is a real cost you will face. Base value for FBT excludes stamp duty and registration; this uses the price you enter. General information only, not tax, credit or financial advice - and a novated lease has to be agreed with your employer before the income is earned.
How a novated lease actually works (and who the three parties are).
A novated lease is a three-way agreement. You lease the car from a financier, and your employer agrees to take the payments out of your salary and send them on. That agreement is the novation - it is what moves the lease payments from your after-tax money into your payroll, and it is why you cannot arrange one on your own. Change jobs and the novation ends: the lease reverts to you personally unless the new employer picks it up.
What gets packaged is not just the finance. A fully maintained lease bundles the lease payments with fuel or charging, servicing, tyres, registration and insurance, and the whole bundle comes out of your pay. Your employer is registered for GST and claims it back, so the 10% comes off the running costs for as long as you hold the lease. That is the part people underestimate - it applies every time you fill up, not just at purchase.
Two limits on the GST, since this page exists to name the things the brochures leave out. The credit on the car itself is capped at one eleventh of the ATO car limit - $69,883 in 2026-27, so $6,353 at most, no matter what the car costs. And GST applies again on the residual if you pay it out at the end, which is the most common way a lease finishes. The GST saving is real; it is not the whole 10% of everything, for ever.
The catch sits in the split. Packaging a car creates a fringe benefit worth 20% of the car's base value under the statutory formula, and FBT on that would cost more than the packaging saves. The standard fix is the employee contribution method: you pay an amount equal to that taxable value out of your post-tax pay, which drops the FBT to nil. That post-tax slice gets no tax benefit at all. It is the single biggest reason a lease on a $40,000 car packages proportionally better than one on an $80,000 car, and it is why the honest question is never “how much do I save” but “what does this car cost my take-home pay”.
At what salary is a novated lease worth it?
There is no salary threshold, and anyone quoting one is selling something. A novated lease is worth your marginal tax rate, so the answer moves with the bracket you sit in - and because only the pre-tax slice earns that rate, a higher income makes the same car cheaper rather than making the structure work at all. These are the 2026-27 resident rates including the Medicare levy.
| Taxable income | Marginal rate | Worth per $1,000 pre-tax |
|---|---|---|
| $0 - $18,200 | 0% | nil |
| $18,201 - $45,000 | 17% | $170 |
| $45,001 - $135,000 | 32% | $320 |
| $135,001 - $190,000 | 39% | $390 |
| Over $190,000 | 47% | $470 |
Only the pre-tax portion earns the rate in the last column. The ECM slice comes out of post-tax pay and saves nothing, which is why the calculator above splits the two rather than quoting one blended “saving”. The Medicare levy is included at 2%, which is right for most people but not at the bottom of the scale: below the low-income threshold it is nil, and through the phase-in range just above it the effective rate is higher than the 17% shown.
An EV and a petrol car at the same price are not the same deal.
This is the largest single variable on the page and it is worth separating from everything else. An eligible battery electric vehicle under the fuel-efficient luxury car tax threshold is exempt from FBT, which means there is no fringe benefit to cancel and no employee contribution to make. The whole packaged amount can come out of pre-tax pay. On a petrol car of the same price, the ECM claws back the statutory 20% of base value into post-tax dollars, and that slice earns nothing.
Two things temper it, and neither appears on a lease company's calculator. The exemption removes the FBT, not the reporting: the grossed-up value still lands on your income statement as a reportable fringe benefits amount, where it counts toward the Medicare levy surcharge, study loan repayments, child support and family payments. And the exemption is narrowing - announced in May 2026, though not yet legislated, to apply only up to $75,000 from 1 April 2027. The announcement says leases already in place are not affected, which makes the timing worth understanding rather than panicking about. Tick the EV box in the calculator above and the reportable amount is shown alongside the saving rather than instead of it.
What is the downside of a novated lease?
Four, and a calculator that shows you a monthly saving without them is not showing you the deal.
- The residual is real money. A balloon payment is owed at the end of the term, and it is not in the monthly figure. You pay it out, refinance it, or sell the car to cover it - and if the car is worth less than the residual by then, the gap is yours.
- It ties the car to the job. The novation ends when the employment does. On a five-year term that is a long commitment to one payroll arrangement, and it is the risk nobody prices.
- You are financing, at the financier's rate. The tax treatment is set by law, but the interest rate, the residual and the lease company's fees are set commercially and vary a great deal between quotes. Two leases on the same car are not the same lease.
- The reportable amount follows you. Packaging lowers your taxable income but the grossed-up benefit still counts on the income tests that decide the Medicare levy surcharge, HELP repayments and family payments. Some people come out ahead on tax and behind on those.
How do you calculate a novated lease?
Start from your quote, not from a savings percentage. Take the annual lease payments and the annual running costs the financier has bundled in, subtract the GST your employer claims back, and you have the packaged cost. Split that into the pre-tax portion and the ECM portion - on a petrol car the ECM portion is 20% of the car's base value, on an FBT-exempt EV it is nil. Multiply the pre-tax portion by your marginal rate from the table above; that is the income tax you no longer pay. Packaged cost minus that tax saving is what the car actually costs your take-home pay.
Then compare it against the honest alternative, which is buying and running the same car with your own after-tax money - not against a savings figure with no denominator. That comparison is the calculator at the top of this page, and the residual belongs in the answer at the end of it.
ATO minimum residual values
| Lease term | Minimum residual |
|---|---|
| 1 year | 65.63% |
| 2 years | 56.25% |
| 3 years | 46.88% |
| 4 years | 37.50% |
| 5 years | 28.13% |
Percentage of the car's cost owing at the end of the term. It is not optional and it is not in the monthly figure - you pay it out, refinance it, or sell the car to cover it. A longer term lowers the payment and lowers the residual; it also means more interest and a longer commitment to one employer arrangement.
Common questions
→How does a novated lease actually save money?
Three separate ways, and it is worth keeping them apart. The lease payments and running costs come out of your pay before income tax, so you buy the car with pre-tax dollars. Your employer claims the GST, so the 10% comes off fuel, servicing, tyres and insurance for the life of the lease, and off the car itself up to the ATO's car limit - $69,883 in 2026-27, which caps that part of the saving at $6,353 however expensive the car is. And if the car is an eligible electric vehicle it is exempt from fringe benefits tax, which is what makes EV leases so much stronger than petrol ones.
→What is the employee contribution method?
Packaging a car creates a fringe benefit, and under the statutory formula its taxable value is 20% of the car's base value. FBT on that would cost more than the packaging saves, so instead you pay an amount equal to that taxable value out of your post-tax pay. That reduces the FBT to nil. The consequence worth understanding: that post-tax slice gets no tax benefit at all, which is why a cheaper car packages proportionally better than an expensive one.
→Are electric vehicles still exempt from FBT?
Yes, and the full exemption runs to 31 March 2027. A battery electric vehicle priced under the fuel-efficient luxury car tax threshold of $91,661 is exempt for the whole 2026-27 FBT year. A wind-back was ANNOUNCED on 5 May 2026 following Treasury's statutory review, in three stages: from 1 April 2027 the full exemption applies only up to $75,000, with a 25% discount between there and the threshold; from 1 April 2029 only that 25% discount remains. Two things to be clear about, because they cut the other way. It is an announcement, not law - the implementing legislation has not been released, so the detail can still move. And the Government has said existing leases will not be affected, so a lease entered into before the change is expected to keep its treatment for the term, as happened with plug-in hybrids in 2025. Confirm it against the legislation when it lands rather than against this paragraph.
→Does an FBT-exempt EV still show on my payment summary?
Yes, and this catches people out. The exemption removes the FBT, not the reporting. The grossed-up value still appears as a reportable fringe benefits amount and counts as income for the Medicare levy surcharge, study loan repayments, child support and family payments. Some people are worse off on those tests even while they are ahead on tax.
→What is the residual, and why does nobody mention it?
The balloon payment owed at the end of the lease, set by ATO minimum values based on the term - about 66% of the price on a one-year lease, down to 28% on a five-year one. It is a real cost you will face, by paying it out, refinancing it or selling the car. A calculator that shows you a monthly saving without mentioning it is not showing you the deal.
→What happens after 5 years of a novated lease?
The term ends and the residual falls due - on a five-year lease that is 28.13% of the car's cost, the ATO minimum. You have three choices and they are all real: pay it out and own the car, refinance the residual into a new lease on the same car, or sell the car and settle the residual from the proceeds. The risk is the gap: if the car is worth less than the residual, the shortfall comes out of your pocket. A longer term lowers both the monthly payment and the residual, so the five-year balloon is the smallest - it just costs more interest to get there.
→Is a novated lease worth it on an average salary?
It works at any income above the tax-free threshold, but it is worth less at the bottom. The benefit is your marginal rate applied to the pre-tax portion, so someone on $70,000 saves 32c in the dollar on that slice where someone on $200,000 saves 47c. What decides it more often than salary is the car: because the employee contribution slice is a flat 20% of the car's base value and earns nothing, a cheaper car packages proportionally better. An FBT-exempt EV changes the arithmetic again, because there is no post-tax slice at all.
→Can I get a novated lease if I am self-employed?
Not on your own. A novation is an agreement between you, your employer and the financier, so it needs an employer with a payroll to run the deductions through. A sole trader with no payroll cannot novate a lease to themselves, though a director paid as an employee of their own company generally can. If you carry on a business and use the car for it, claiming the running costs directly is usually the comparison to make instead.
→Is a novated lease better than a car loan?
It depends on your marginal rate, on whether the car is FBT-exempt, and on how the two are priced - not on the structure alone. The lease gets you the pre-tax treatment and the GST saving, which a car loan does not. The loan leaves the car yours from day one, does not tie the arrangement to your employer, and has no residual to settle. On a petrol car at a low marginal rate with a sharp loan rate, the loan can win; on an FBT-exempt EV at 39% or 47%, the lease usually wins comfortably. Run both against the same drive-away price rather than comparing a monthly lease payment to a monthly loan repayment, which flatters whichever has the bigger balloon.
→Do I need my employer to agree?
Yes. A novated lease is a three-way agreement between you, your employer and the financier, and like any salary packaging it has to be in place before the income is earned. If you change jobs the novation ends and the lease reverts to you personally unless the new employer takes it on - worth thinking about before a five-year term.
If you don't have a quote yet
Get a novated lease quote through our partner
Who arranges it, and how we're paid, inside.
If you don't have a quote yet
Get a novated lease quote through our partner
Who arranges it, and how we're paid, inside.
LINK does not write novated leases. We work with a specialist novated leasing provider who does, and this form sends them what you have already modelled above - salary, car price, running costs - so the quote comes back on your actual numbers rather than a generic example. Your employer has to agree to pay a lease from your salary before it can go ahead, and the leasing company arranges that with them.
→Put this calculator on your own siteFree, no sign-up, no script from us to install. Keeps working as the rates change.
Paste this where you want the novated lease calculator to appear. It sizes itself to your page, and it updates whenever we update the rates - so it will not quietly go stale on you at the end of a financial year, which is the usual problem with a copied table.
Please keep the credit line - it is the only thing we ask for in return.
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