Model the ATO Statutory Formula Method for FBT, the Employee Contribution Method, and see the real impact of a novated lease on your take-home pay - plus how it stacks up against buying outright.
Recent Calculations
FBT and income tax calculations are always performed in AUD per Australian Taxation Office (ATO) rules, regardless of the display currency selected above. Display currency only changes the units amounts are shown in for your convenience.
A$
A$
Defaults to 8% of drive-away price - edit to match your actual quote. Base Value for FBT = Drive-Away Price − On-Road Costs.
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Lease Type
A$
Fully Maintained bundles these running costs (via cents-per-km + annual insurance/rego) into your pre-tax packaged budget. Switch to Non-Maintained to package only the lease/finance payment - running costs are then shown as an informational estimate you pay yourself.
Electric Vehicle FBT Exemption
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Current threshold for fuel-efficient vehicles, indexed annually - verify against current ATO guidance. If the drive-away price is at or below this threshold, FBT is exempt and no ECM is required. Above threshold, standard FBT rules apply.
Fringe Benefits Tax (FBT)
A$
Defaults to the full Employee Contribution Method (ECM) offset (fully cancels FBT payable). Reduce this to see the FBT payable that would remain. Leave blank to auto-track the full offset as other inputs change.
Export Details
Optional - blank fields are omitted from the export. Nothing is sent anywhere; all fields stay in your browser.
Estimated Cost to Take-Home Pay (per fortnight)
$0.00
Lease / Finance Payment (annual)
$0.00
Residual Value
$0.00
FBT Payable (annual)
$0.00
ECM Contribution (annual)
$0.00
Total Pre-Tax Packaged (annual)
$0.00
Total Annual Cost
$0.00
Running Cost Budget (Fully Maintained)
Item
Annual Amount
Take-Home Pay: Without vs With Novated Lease
This calculator provides general information only and is not financial, tax, or legal advice. Individual circumstances vary. FBT rates, ECM mechanics, income tax brackets, and the LCT threshold are simplified, current-year approximations subject to change and do not account for the Medicare levy, HECS/HELP repayments, or other individual factors. The lease/finance payment uses a standard annuity-style approximation; real lease pricing includes financier margins and fees not modeled here. Consult a licensed financial adviser, accountant, or novated lease specialist, and refer to current ATO guidance, before making a decision.
Vehicle price, lease term, FBT/ECM outcome, and income tax savings are shared from the Novated Lease Calculator tab - go there first to set them. This tab compares that novated lease against buying the same car via a personal loan or outright cash purchase.
Alternative Purchase Method
Defaults to matching the novated lease term set on Tab 1. Personal loan payments are made entirely from post-tax income - no salary packaging or FBT applies.
Cash purchase: the full drive-away price is paid upfront from post-tax savings. No financing cost, but the full amount leaves your take-home pay/savings immediately with no tax benefit.
GST Savings (novated lease only)
$0.00
Income Tax Savings (novated lease only)
$0.00
Net Advantage of Novated Leasing
$0.00
Positive = novated lease saves money
Total Cost Over Lease Term: Novated Lease vs Alternative
Comparison
Metric
Novated Lease
Alternative
Optional - blank fields are omitted from the export.
This calculator provides general information only and is not financial, tax, or legal advice. Individual circumstances vary. FBT rates, ECM mechanics, income tax brackets, and GST treatment are simplified, current-year approximations subject to change. Consult a licensed financial adviser, accountant, or novated lease specialist before making a decision.
A novated lease can genuinely reduce what a car costs you, or barely move the needle, depending entirely on your income tax bracket, the car’s price relative to the luxury/fuel-efficient thresholds, and how the Fringe Benefits Tax (FBT) is handled. This calculator models the full Australian salary-packaging mechanics, including FBT, the Employee Contribution Method (ECM), and GST savings, then compares the result against buying the same car with a personal loan or cash.
How to use this novated lease calculator
Enter the vehicle’s Drive-Away Price and your Annual Salary (before tax).
Set your Lease Term, interest rate, and Residual Value (balloon) percentage.
Add running costs if you want a fully maintained lease estimate (fuel, servicing, insurance, registration, tyres).
Check whether the car is an eligible fuel-efficient/electric vehicle under the LCT threshold, this can make it FBT-exempt.
Review your Estimated Cost to Take-Home Pay per fortnight, FBT Payable, and ECM Contribution.
Switch to the Novated Lease vs Buying Outright tab to compare against a personal loan or cash purchase.
What this novated lease calculator does
A novated lease is a three-way agreement between you, your employer, and a finance company, where your employer deducts lease payments (and running costs, if fully maintained) from your pre-tax salary. This calculator estimates the annual lease/finance payment using a standard annuity-style approximation, then works out the FBT consequence of that arrangement and how much of the benefit survives after the ATO’s rules are applied.
Fringe Benefits Tax and the Statutory Formula Method
Since 1 April 2014, Australia’s Statutory Formula Method for calculating a car’s taxable value uses a single flat rate of 20% of the vehicle’s base value, regardless of how many kilometres you drive annually (a change from the old sliding scale that rewarded higher mileage with a lower rate). This taxable value is then multiplied by the FBT rate (currently 47%) and adjusted by the gross-up factor to arrive at the FBT payable.
Taxable Value = Base Value × 20%
FBT Payable = Taxable Value × Gross-Up Factor × FBT Rate (47%)
The Employee Contribution Method (ECM)
The ECM is the standard technique for reducing or eliminating FBT liability on a novated lease. Instead of your employer absorbing the FBT cost, you make part of your lease payment from your post-tax (after-tax) income rather than pre-tax. That post-tax contribution directly offsets the taxable value used in the FBT calculation, and if the contribution equals the full FBT-inclusive taxable value, the FBT payable drops to zero. This calculator defaults to modelling a full ECM offset, since that’s the standard approach most salary packaging providers use, and lets you reduce the contribution manually to see the FBT that would remain payable instead.
The fuel-efficient vehicle FBT exemption
Eligible battery electric, hydrogen fuel cell, and plug-in hybrid vehicles priced below the Luxury Car Tax (LCT) threshold for fuel-efficient vehicles can be entirely exempt from FBT under current electric vehicle FBT exemption rules. This calculator checks your drive-away price against the LCT threshold field, which you should verify against current ATO guidance since it’s indexed annually, and applies the exemption when eligible.
Novated lease vs buying outright
The second tab compares your novated lease against financing the same car with a personal loan, or paying cash outright. The key structural difference: novated lease payments (and running costs, if fully maintained) come from pre-tax salary and also avoid GST on the purchase price and running costs, while a personal loan or cash purchase is funded entirely from post-tax income with no GST or income tax benefit. The Net Advantage of Novated Leasing figure nets the GST savings and income tax savings against any FBT/ECM cost, so a positive number means the novated lease saves you money over the comparison method.
Frequently asked questions
What is the Employee Contribution Method and why does it matter?
ECM is where you pay part of your novated lease from post-tax income instead of pre-tax. That post-tax contribution offsets the car’s FBT taxable value, and a full offset can reduce FBT payable to zero, which is why most novated lease arrangements use it by default.
Why does the drive-away price matter for FBT?
The Statutory Formula Method calculates taxable value as 20% of the vehicle’s base value, so a higher purchase price directly increases the FBT payable (before any ECM offset). Vehicles priced below the fuel-efficient LCT threshold may also qualify for a full FBT exemption if they’re eligible electric, hydrogen, or plug-in hybrid vehicles.
Is a novated lease always cheaper than buying outright?
Not necessarily; it depends heavily on your income tax bracket, the car’s price, and whether you qualify for the FBT exemption. Higher-income earners in higher tax brackets generally see larger benefits from pre-tax packaging, which is why this calculator’s compare tab nets out the GST and income tax savings against any residual FBT/ECM cost.
What does this calculator not account for?
It uses a standard annuity-style approximation for the lease payment and doesn’t include the Medicare levy, HECS/HELP repayments, or financier-specific fees and margins. It’s intended for general estimation only, consult a licensed financial adviser, accountant, or novated lease specialist, and refer to current ATO guidance, before making a decision.
