2025 - 2027 ATO Tax Rules & Stage 3 Rates

Novated Lease Calculator Australia

Australia's independent novated lease calculator. Calculate your exact take-home pay impact, income tax savings, and upfront GST discount. Use our built-in EV novated lease calculator to compare zero-FBT electric vehicles against hybrids and petrol models under ATO Stage 3 tax rules.

Popular Australian Vehicles PresetsTap to load values instantly
1

Vehicle & Powertrain

100% FBT Free (EV Discount)
$
$20k$50k$91,661 LCT EV Limit$150k
*ATO minimum statutory residual percentage shown underneath
2

Your Income & Mileage

Stage 3 Marginal Rate: 32% (incl. 2% Medicare)
$
$40k (18%)$95k (32%)$140k (39%)$200k+ (47%)
15,000 km / yr
5,000 km15,000 km (Avg)25,000 km40,000 km
3

Bundled Running Costs

Fuel/power, comprehensive insurance, rego & maintenance included

$3,400 / yr
⚡ EV Charging$756 / yr
Calculated based on 15,000 km/yr
🛡️ Comprehensive Insurance$1,600 / yr
Includes agreed value & roadside
📋 Rego & CTP$850 / yr
Annual state road fees
🔧 Servicing & Tyres$700 / yr
Scheduled logbook & tyre allowance

*All packaged running costs are 100% GST-free through your novated lease, saving 1/11th (~9.1%) on every invoice in addition to your income tax savings!

Pay Frequency
Net Take-Home Pay Impact(Out-of-pocket per fortnight)
$224/ fortnight

Covers the car payment AND all running expenses (fuel, insurance, rego, tyres, service).

Income Tax Saved / yr
$4,285
32% marginal rate
Total Upfront GST Saved
$5,809
Off vehicle price
Total Savings Over Term
$27,234
vs buying with a personal car loan + paying after-tax running costs.
Estimated Savings by Year
Selected term: 5 Years
Total Savings Over Term$27,234
Pre-tax Salary Sacrifice:$329 / fn
Post-tax Contribution (ECM):$0 / fn
Running Costs GST Saved:$309 / yr
ATO Residual (Balloon at end):$17,975
Get Official Written Quote
🔒 100% Free & No Obligation • No impact on credit score
ATO Compliant
Statutory Guidelines
All States
Australia-wide
FBT Exempt
Zero Emission Act
Finance Comparison

Novated Lease vs Standard Loan vs Cash

See how salary packaging your vehicle with pre-tax dollars beats financing through a personal car loan or paying with cash.

Maximum Tax Savings

Novated Lease

Salary sacrifice via payroll

Net Take-Home Pay Impact
$224 / fn
Saves ~$27,234 over term
  • ✓ Up to $6,353 GST saved on car purchase
  • ✓ Pre-tax payments reduce taxable salary
  • ✓ 10% GST saved on fuel/power & servicing
  • ✓ 100% FBT Free for eligible EVs

Standard Car Loan

Personal bank or dealer finance

Out-of-Pocket Cost
$410 / fn
No tax or GST discounts
  • ✕ Full 10% GST paid on car purchase
  • ✕ Repaid 100% using post-tax net income
  • ✕ Full GST & after-tax money on running costs
  • ✓ Own the car directly at loan completion

Cash Outright

Paying from personal savings

Upfront Capital Loss
$63,900
+ after-tax running costs
  • ✕ Ties up large liquid cash capital
  • ✕ Misses $6k+ GST savings and income tax breaks
  • ✕ Lost interest / investment returns on capital
  • ✓ Zero ongoing monthly interest expense
Authoritative Australian Tax & Finance Guide

Complete Guide to Using Our Novated Lease Calculator

Everything you need to know about salary packaging your vehicle, maximizing ATO Stage 3 tax relief, and calculating Electric Vehicle (EV) zero-FBT savings in Australia.

Financing a motor vehicle is one of the largest financial commitments an Australian household will make. Traditionally, drivers purchased vehicles using after-tax personal savings or secured high-interest car loans where 100% of repayments and running costs were funded out of net take-home pay. A novated lease fundamentally changes this equation. By taking advantage of salary packaging under Australian Taxation Office (ATO) legislation, you can fund your vehicle and all associated running expenses using your pre-tax gross salary.

Our free online novated lease calculator provides salaried employees across Australia with complete financial clarity. Whether you are considering an economical city hatchback, a family SUV, a commercial ute, or an electric car, this calculator computes your exact take-home pay impact, income tax savings under revised Stage 3 tax brackets, and upfront Goods and Services Tax (GST) discounts.

⚙️ How Our Novated Lease Calculator Australia Works

To understand the results produced by our novated lease calculator australia, it helps to understand the three distinct layers of savings embedded in an Australian novated lease agreement:

1. Upfront GST Discount

Because a commercial financier purchases the vehicle on your behalf, they claim an Input Tax Credit for the 10% GST on the car price. This saving (up to $6,353) is passed directly to you, lowering your financed amount.

2. Pre-Tax Salary Deductions

Your employer deducts lease payments and bundled vehicle running expenses directly from your gross earnings each pay cycle before PAYG tax is calculated, lowering your overall taxable income.

3. GST-Free Running Costs

Every dollar you spend on packaged electricity charging, fuel, comprehensive insurance, registration, maintenance, and tyres is 100% GST-free, saving an additional 1/11th on every invoice.

Our calculator dynamically integrates these three components with your individual income level, annual driving distance, and desired lease term (12 to 60 months) to give you an accurate per-pay-cycle deduction figure.

⚡ EV Novated Lease Calculator: Maximizing the Zero-FBT Electric Car Discount

The introduction of the Treasury Laws Amendment (Electric Car Discount) Act marked the most significant change to Australian vehicle taxation in decades. Under this policy, eligible zero and low-emission vehicles (including Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles) are 100% exempt from Fringe Benefits Tax (FBT).

When you use our ev novated lease calculator, this special tax exemption is applied automatically. For an electric vehicle valued beneath the Fuel-Efficient Luxury Car Tax (LCT) threshold ($91,661 for FY 2026/27):

  • 100% Pre-Tax Funding: Unlike petrol or diesel cars that require after-tax contributions to offset FBT, an eligible EV is funded entirely with pre-tax salary. This means every dollar of finance and running costs shields your income from tax at your highest marginal rate.
  • Zero Employee Contribution Method (ECM): You do not need to make any after-tax salary deductions.
  • All Charging & Running Costs Covered: Home charging electricity, public DC fast charging subscriptions, comprehensive insurance, tyres, and annual registration are packaged 100% pre-tax and GST-free.
  • Substantial Term Savings: On popular Australian models such as the Tesla Model Y, Tesla Model 3, BYD Atto 3, BYD Seal, and MG4, drivers typically save between $20,000 and $38,000 over a 4 to 5-year lease compared to cash purchases or conventional bank loans.
Important LCT Threshold Note: To maintain 100% FBT exemption, the first retail sale price of the EV must not exceed the fuel-efficient Luxury Car Tax threshold ($91,661). If an EV's retail price exceeds this limit, standard statutory FBT rules apply. Our calculator automatically alerts you if your chosen vehicle price exceeds this threshold.

Petrol, Diesel & Hybrid Vehicles: How the Employee Contribution Method (ECM) Works

If you prefer a conventional internal combustion engine (ICE) or hybrid vehicle — such as a Toyota RAV4 Hybrid, Ford Ranger, Mazda CX-5, or Hyundai Tucson — you can still achieve substantial tax savings. Because non-EVs are subject to Fringe Benefits Tax, Australian novated lease agreements utilize the Employee Contribution Method (ECM).

Under the ATO's Statutory Formula Method, the annual taxable value of a vehicle is calculated as a flat 20% of its base purchase price. To eliminate any FBT liability for your employer, you contribute an amount equal to that 20% taxable value using your post-tax (after-tax) salary. The remaining finance repayment and all vehicle running expenses are paid with pre-tax salary.

The result? Your employer pays exactly $0 in FBT, while you still save thousands in upfront purchase GST, running cost GST, and income tax on the pre-tax salary sacrifice portion. Our calculator automatically handles this mathematical allocation behind the scenes.

How Australia's Stage 3 Tax Rates Affect Your Novated Lease Savings

The tax savings generated by a novated lease depend directly on your individual marginal income tax bracket. The higher your tax bracket, the greater your tax refund per dollar salary sacrificed. Our calculator incorporates the Australian Stage 3 individual income tax brackets (including the 2% Medicare levy):

Taxable Income RangeBase Tax RateMedicare LevyTotal Marginal Rate
$0 – $18,2000%0%0%
$18,201 – $45,00016%2%18%
$45,001 – $135,00030%2%32%
$135,001 – $190,00037%2%39%
$190,001+45%2%47%

For instance, an Australian earning $110,000 is in the 32% marginal tax bracket. Every $1,000 packaged through a novated lease only reduces take-home salary by $680, with the tax office effectively covering the remaining $320.

ATO Statutory Minimum Residual Values (Balloon Payments)

In accordance with ATO taxation rulings, every novated lease must have an established minimum residual value at the end of the lease term. This ensures the lease is classified as a genuine commercial lease:

  • 1 Year Lease (12 Months): 65.63% minimum residual
  • 2 Year Lease (24 Months): 56.25% minimum residual
  • 3 Year Lease (36 Months): 46.88% minimum residual
  • 4 Year Lease (48 Months): 37.50% minimum residual
  • 5 Year Lease (60 Months): 28.13% minimum residual

When your lease term concludes, you have complete flexibility. You can trade the vehicle in (any surplus profit above the residual value is yours to keep 100% tax-free), pay out the residual to own the car outright, or refinance the residual for another 1 to 3 years to continue enjoying pre-tax running costs.

Start Exploring Your Real-World Salary Packaging Potential

Scroll back up to our interactive novated lease calculator above to customize your vehicle price, test various annual driving distances, adjust your gross salary, and toggle between EV, Hybrid, and Petrol powertrains. With zero obligation and real-time Stage 3 calculations, finding out exactly how much you can save has never been easier.

Step-by-Step Process

How a Novated Lease Works from Start to Driveway

Setting up your novated lease is smooth, compliant, and handled end-to-end between you, your employer, and the financier.

01

Pick Any Car You Want

Choose any new or used passenger vehicle up to 1 tonne payload. Leverage fleet buying power for dealer discounts and upfront GST savings of up to $6,353.

02

Calculate & Tailor Budget

Bundle your finance repayments and running costs (charging/fuel, comprehensive insurance, rego, maintenance, tyres) into one simple pre-tax package.

03

Employer Payroll Deduction

Your employer signs the three-way novation deed. Payments are deducted smoothly each payday before tax, immediately boosting your net take-home cash.

04

Drive with 100% Personal Freedom

The car is 100% yours to drive wherever, whenever, with zero logbook requirements for private use. At lease end, trade in, payout, or extend.

Freedom of Choice

Did You Know? You Don't Have to Settle for Your Employer's Panel Provider.

With a self-managed novated lease, government and corporate employees can shop around for the most competitive financier interest rates and vehicle fleet pricing. Your employer continues to manage standard payroll deductions seamlessly.

Everything You Need To Know

Frequently Asked Questions

Clear, honest answers about Australian novated leasing, FBT guidelines, and salary packaging.