To see your take‑home after tax, salary calculator Australia.
Novated Lease Calculator
Discover how a novated lease could impact your take-home pay and tax obligations.
Step 1 of 3: Your Salary
Your Salary
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How Novated Leasing Works
A novated lease bundles your car's finance and running costs into a single payment deducted from your salary. Here’s a simplified breakdown.
Pre-Tax Deductions
Your employer deducts funds for the car's finance and running costs (fuel, insurance, servicing) from your salary before tax, reducing your taxable income.
Post-Tax Deductions (ECM)
To eliminate Fringe Benefits Tax (FBT), a portion of the costs is taken from your post-tax salary. Our calculator automatically works this out.
The Net Benefit
The tax saving comes from paying for most car expenses with pre-tax money. Your 'Net Financial Position' in the calculator shows this total annual benefit.
Key Financial Insights
A novated lease offers significant tax advantages by allowing you to pay for your vehicle and its running costs from your pre-tax salary. This structure reduces your taxable income, which in turn lowers the amount of income tax you pay over the year.
- The tax savings depend on your income bracket; higher earners typically save more.
- Running costs like fuel, insurance, and maintenance are also paid with pre-tax dollars, amplifying the benefit.
Key Terminology
Fringe Benefits Tax (FBT)
A tax that employers pay on certain benefits provided to employees, including the use of a company car. It is calculated at 47% of the 'grossed-up' taxable value of the benefit.
Employee Contribution Method (ECM)
A method where an employee makes post-tax contributions towards the running costs of their car. These contributions reduce the FBT taxable value, often to zero, which is a key mechanism for tax savings.
Residual Value (or Balloon Payment)
A lump-sum payment required at the end of a lease term to take ownership of the vehicle. The ATO sets minimum residual value percentages based on the lease term.
Statutory Formula Method
The most common method for calculating the FBT taxable value of a car. It uses a flat rate of 20% of the car's base value, regardless of the distance travelled.