Eligible electric cars are exempt from Fringe Benefits Tax, so the whole lease comes out of your pre-tax salary. See what that actually means for your take-home pay — the net cost, the discounts, and the residual at the end.
Indicative only — a real quote will differ.
Three things combine to make eligible EVs cheaper through a novated lease.
Eligible vehicles are battery or hydrogen electric passenger cars first used on/after 1 July 2022, under the luxury car tax threshold. Plug-in hybrids stopped qualifying from 1 April 2025. 2025–26 marginal rates (incl 2% Medicare) are used. This is an indicative model, not financial advice. One caution worth repeating: tax saved is best understood as a discount on package spending, not a net benefit — for a deeper treatment of why "tax saved" is the wrong headline to judge a lease by, see the independent Novated Lease Guide.
Eligible electric cars are exempt from Fringe Benefits Tax, which lets you pay for the whole lease — and its running costs — out of your pre-tax salary.
With a novated lease, your employer deducts the lease payments from your salary before income tax is calculated, lowering your taxable income. For most cars this benefit is partly clawed back by FBT, but battery and hydrogen electric vehicles under the luxury car tax threshold ($91,387 in 2025–26) are FBT-exempt — so the saving stays in your pocket.
The savings come from three places: the income tax you no longer pay on the salary you sacrifice, the GST you avoid on the car’s purchase price (capped) and on running costs, and bundling fuel, insurance and servicing into the pre-tax package. Higher earners benefit most, because they sacrifice from a higher tax bracket.
Be careful with how "savings" are framed — by this calculator or any provider quote. The tax and GST reductions are real, but they work like a discount on the package's costs, not money in your pocket: a lease also carries interest, provider fees and margins that this tool cannot see, and a discount only leaves you better off if the discounted total beats your realistic alternative — paying cash, a competitively priced car loan, or simply keeping your current car. Treat the number above as the mechanics of the discount, and judge any real quote by its total cost against those alternatives.
The exemption is also winding back. In the May 2026 Budget, following Treasury's statutory review, the government announced a three-phase change: leases entered before 31 March 2027 keep the full exemption for their whole term; from 1 April 2027 the full exemption applies only to EVs priced $75,000 or less, with dearer EVs receiving a 25% FBT discount; and from 1 April 2029 all eligible EVs move to the 25% discount. This is an indicative estimate, not financial advice — get a formal quote and consider professional advice before signing.
Quick answers about EV novated leasing in Australia.
A three-way arrangement between you, your employer and a finance company: the car and its running costs are paid out of your salary before tax, and the lease obligation moves with you if you change jobs (it can be re-novated to a new employer). You don’t need to own the car outright until the residual is paid at the end.
Eligible electric cars are exempt from fringe benefits tax (FBT) under the federal Electric Car Discount — battery or hydrogen EVs under the luxury car tax threshold, first used on or after 1 July 2022. That exemption lets the whole lease come out of pre-tax salary without the usual FBT cost. Plug-in hybrids stopped qualifying for new arrangements from 1 April 2025, and the May 2026 Budget announced a wind-back: leases entered before 31 March 2027 keep the full exemption for their term; from April 2027 only EVs $75,000 or less qualify in full; from April 2029 all EVs move to a 25% FBT discount.
The amount still owing on the car when the lease ends, set as a minimum percentage of the car’s value by ATO rules — from about 66% after a 1-year lease down to about 28% after 5 years. You can pay it out and keep the car, refinance it, or sell the car; this calculator shows the residual for your chosen term.
The savings scale with your marginal tax rate: someone paying 39–47% tax saves considerably more per dollar packaged than someone on 18%. There are also GST savings on the car price (capped) and on running costs. The calculator applies 2025–26 tax brackets automatically from your salary.
No. It’s an indicative model to help you understand how the tax mechanics work. Real quotes include lease-company fees, interest rates and inclusions that vary widely, and tax settings can change — always get a formal quote and consider advice from a licensed professional before signing.
