Salary Packaging

Novated Lease Save on Tax

Salary package your next car and save thousands on income tax, GST, and running costs. Electric vehicles are FBT exempt, making novated leases the cheapest way to drive an EV in Australia.

Running costs, rego, insurance, and servicing all included in one pre-tax deduction.

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Novated Lease Estimator

See your pre-tax salary deduction

Loan Amount

$50,000

$10,000$100,000

Interest Rate (p.a.)

5.99%

5.00%10.00%

Loan Term

4 years

1 years 5 years

Monthly Payment

$1,174.02

Total Interest

$6,353

Total Repayment

$56,353

Principal (88.7%)Interest (11.3%)

Principal: $50,000

Interest: $6,353

This calculator provides estimates only. Actual rates and repayments may vary based on your circumstances and lender requirements.

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Novated Lease at a Glance
Pay for your car and running costs from pre-tax salary, reducing your taxable income
Save on GST — the purchase price and running costs are GST-free through salary packaging
EVs under $91,387 are FBT exempt, saving an additional $5,000-$15,000+ per year
Running costs bundled in: fuel/charging, insurance, rego, servicing, and tyres
Portable between employers — take the lease with you if you change jobs

How a Novated Lease Works

A novated lease involves three parties: you, your employer, and the finance company. Here is how the arrangement flows:

You choose a car — new or used, any make and model
Finance company purchases the car — they own the vehicle during the lease term
Three-way agreement signed — a “deed of novation” is signed by all three parties
Employer deducts from your salary — lease payments and budgeted running costs come from your pre-tax salary each pay cycle
At lease end — pay the residual value to own the car, refinance, trade in, or start a new lease on a different car

The “novation” means your employer takes on the obligation to make payments on your behalf from your salary. If you leave that employer, the obligation reverts to you personally, or you can novate the lease to a new employer.

Tax Savings Breakdown

Novated leases deliver tax savings through multiple mechanisms. Here is a practical example comparing buying a car normally versus via novated lease:

Annual Costs ($50K Car, $120K Salary)	Buy Normally	Novated Lease
Car Payments (from after-tax income)	$12,600	$0 (pre-tax)
Pre-Tax Salary Deduction	$0	$10,800
GST Paid on Purchase	$4,545 (over life)	$0
Running Costs (from after-tax)	$5,500	$0 (included pre-tax)
Income Tax Reduction	$0	$3,500 - $5,000
Estimated Annual Saving	—	$4,000 - $6,000

Example is illustrative. Actual savings depend on income, vehicle price, and circumstances.

EV FBT Exemption: Even Bigger Savings

Electric vehicles under $91,387 are fully FBT exempt when salary packaged
This eliminates the need for post-tax employee contributions to offset FBT
Combined savings for EV novated lease: $8,000-$15,000+ per year vs buying normally
Learn more about EV finance options

What Running Costs Are Included?

A fully maintained novated lease bundles the following costs into your pre-tax salary deduction:

Fuel or electricity charging — budgeted based on your estimated annual kilometres
Comprehensive insurance — arranged through the lease provider, often at fleet discount rates
Registration and CTP — renewal costs included in the budget
Scheduled servicing — manufacturer-recommended services covered
Tyre replacement — budgeted based on expected wear
Roadside assistance — 24/7 coverage included

The Novated Lease Process

Get a Quote

Tell us the car you want and your salary. We calculate your pre-tax deduction and savings.

Employer Approval

We coordinate with your employer or their salary packaging provider to set up the arrangement.

Choose Your Car

New or used, any make and model. We negotiate with the dealer on your behalf.

Drive & Save

Start driving your new car with payments coming from pre-tax salary each pay cycle.

Related Finance Options

Chattel Mortgage

Business vehicle finance

Electric Vehicle Loans

EV green rates + FBT exempt

New Car Loans

Standard new car finance

Business Car Loans

ABN holder finance

Used Car Loans

Pre-owned vehicle finance

WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate. Comparison rates are based on a secured loan of $30,000 over 5 years for vehicle finance and $50,000 over 5 years for equipment finance, as required under the National Credit Code.

Novated Lease FAQs

What is a novated lease?

A novated lease is a three-way agreement between you (the employee), your employer, and a finance company. Your employer deducts the car lease payments and running costs directly from your pre-tax salary. This reduces your taxable income and saves you money on income tax, GST on the purchase price and running costs, and potentially FBT for electric vehicles.

How much can I save with a novated lease?

Savings depend on your income, the vehicle price, and whether the car is an EV. For a $50,000 petrol car on a $120,000 salary, typical annual savings are $3,000-$5,000 through income tax reduction and GST savings. For an EV under the luxury car threshold, savings can reach $8,000-$15,000 annually due to the FBT exemption.

What happens to my novated lease if I change jobs?

If you change employers, the novated lease can be transferred to your new employer (if they offer salary packaging), or you can take over the lease payments personally. The lease does not need to end just because you change jobs. This flexibility is a key advantage of novated leasing.

What running costs are included in a novated lease?

A fully maintained novated lease typically includes fuel or charging costs, comprehensive insurance, registration, scheduled servicing, tyres, roadside assistance, and CTP (greenslip). All these costs are bundled into one pre-tax salary deduction, simplifying your car budget.

Do I need my employer approval for a novated lease?

Yes, your employer needs to agree to the salary packaging arrangement. Most medium to large employers offer novated leasing as a benefit. Some smaller employers may not have a salary packaging policy in place but can set one up. We can provide your employer with the information they need to facilitate the arrangement.

Is FBT payable on a novated lease?

For conventional petrol or diesel vehicles, FBT is payable on the private-use component of the vehicle. This is usually managed through the Employee Contribution Method (ECM) where you make post-tax contributions to offset the FBT. For eligible electric vehicles under the luxury car threshold, FBT is fully exempt since 1 July 2022, making EVs significantly cheaper to salary package.

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Get a free novated lease quote in minutes. See how much you could save on tax.

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