Novated Lease Calculator: EV vs Petrol
Compare what a novated lease on an electric car and on a petrol car really costs you in take-home pay, with the electric car FBT exemption, the employee contribution method and the ATO residual values for 2026–27.
Your result
Electric car: cost to your take-home pay
$8,080.94 a year
$310.81 a fortnight · $4,200.00 a year less than the petrol car ($12,280.94)
- The electric car is exempt from FBT, so all $13,072.20 of its yearly costs come out of pre-tax salary. Its $20,754.00 reportable fringe benefits amount appears on your income statement and counts for tests such as HECS-HELP repayments and the Medicare levy surcharge, but isn’t taxed.
- For the petrol car, $11,000.00 a year (20% of its price) is paid from after-tax pay so no FBT is payable; the rest comes out of pre-tax salary.
Australian resident employee for 2026–27. Assumes the car is available for private use all year, the lessor claims the GST credit on the price, your employer claims GST credits on payments and running costs, and the residual is the ATO minimum. Fees vary by provider and aren’t included. General information, not financial advice.
Rates checked 12 October 2026 against the ATO · How we calculate · Calculated in your browser; nothing you enter is sent anywhere.
Electric vs petrol side by side
| Electric car | Petrol car | |
|---|---|---|
| Car price including GST | $55,000.00 | $55,000.00 |
| GST credit claimed on the price | $5,000.00 | $5,000.00 |
| Amount financed | $50,000.00 | $50,000.00 |
| Residual after 3 years (plus GST) | $23,440.00 | $23,440.00 |
| Lease payment a month | $1,089.35 | $1,089.35 |
| Lease payments a year | $13,072.20 | $13,072.20 |
| Running costs a year | $0.00 | $0.00 |
| Total car costs a year | $13,072.20 | $13,072.20 |
| Fringe benefits tax | Exempt | Nil (employee contribution) |
| Paid from pre-tax salary | $11,883.82 | $1,883.82 |
| Paid from after-tax pay | $0.00 | $11,000.00 |
| Taxable income | $87,116.00 | $97,116.00 |
| Income tax and Medicare | $18,397.12 | $21,597.12 |
| Take-home pay after car costs | $69,719.06 | $65,519.06 |
| Cost to take-home pay | $8,080.94 | $12,280.94 |
| Saving vs paying the same costs from take-home pay | $4,991.26 | $791.26 |
| Reportable fringe benefits amount | $20,754.00 | $0.00 |
How a novated lease works
A novated lease is a three-way agreement between you, your employer and a finance company. Your employer makes the lease payments and pays the car’s running costs out of your salary, and you get the car. Because the costs come out of pre-tax pay, your taxable income falls, but the car becomes a fringe benefit your employer may have to pay fringe benefits tax (FBT) on.
FBT is 47% for the FBT year ending 31 March 2027. Under the statutory formula, the taxable value of a car is 20% of its base value (the cost including GST, excluding registration and stamp duty) for each year it is available for private use, less any after-tax contributions you make. Source: Taxable value of a car fringe benefit, ATO, last updated 6 March 2025.
For a petrol car, the calculator uses the employee contribution method: you pay that 20% from your after-tax pay, the taxable value falls to nil and there’s no FBT. On a $55,000 petrol car that is $11,000.00 a year after tax, with the rest of the costs paid pre-tax.
The electric car FBT exemption
There is no FBT on the private use of an eligible electric car, including through salary packaging. The ATO lists four conditions:
- It is a zero or low emissions vehicle: battery electric or hydrogen fuel cell, carrying a load under one tonne and fewer than 9 passengers.
- It was first held and used on or after 1 July 2022.
- It is used by a current employee or their associates.
- Luxury car tax has never been payable on it. For 2026–27 the threshold for fuel-efficient vehicles is $91,661.
Registration, insurance, repairs, maintenance and the cost of charging are exempt too, so the whole package comes out of pre-tax pay. With both cars at $55,000, the electric car costs $4,200.00 a year less in take-home pay than the petrol car, because none of it is paid after tax. The government will review the exemption by mid-2027.
Sources: Electric cars exemption, ATO, last updated 1 April 2026; Luxury car tax rate and thresholds, ATO, last updated 1 June 2026.
Running costs
Fuel or charging, registration, insurance, servicing and tyres can all be packaged, and for both cars they come out of pre-tax pay with GST credits claimed by your employer. Adding $3,000 a year of running costs to each car raises the take-home cost by $1,854.31 for the electric car and $1,854.31 for the petrol car. Charging and fuel costs differ between the two, so enter your own estimates for each car.
The GST credit on the price is capped at one-eleventh of the car limit, which is $69,883 for 2026–27, so the most that can be claimed is $6,353. Source: Car thresholds from 1 July, ATO, last updated 9 June 2026.
The interest rate starts at 8.27%, the ATO’s FBT benchmark interest rate for the FBT year ending 31 March 2027. It is only a starting point: replace it with the rate in your quote.
Novated lease or salary sacrifice into super?
Both lower your taxable income. Salary sacrificed into super is taxed at 15% in the fund and stays there until retirement; a novated lease pays for a car you use now. See the trade-off for super with the salary sacrifice calculator, and your take-home pay for any salary with the pay calculator.
Frequently asked questions
Are plug-in hybrids exempt from FBT?
Not for new arrangements. From 1 April 2025 a plug-in hybrid is no longer a zero or low emissions vehicle for FBT, so only battery electric and hydrogen fuel cell cars qualify. The ATO says the exemption can continue for some plug-in hybrids in certain conditions. Source: Electric cars exemption, ATO, last updated 1 April 2026.
Do I pay tax on the reportable fringe benefit from an electric car?
No income tax is charged on it, but the grossed-up amount is shown on your income statement and is added back for some income tests, including HECS-HELP repayments and the Medicare levy surcharge. On a $55,000 electric car it is $20,754.00 a year (20% of the price, grossed up by 1.8868). Source: Fringe benefits tax – rates and thresholds, ATO, last updated 20 May 2026.
What happens at the end of a novated lease?
You can pay the residual (balloon) and keep the car, refinance the residual into a new lease, or sell or trade in the car and use the proceeds to pay it. The ATO publishes minimum residual values for car leases: 65.63% of the cost after 1 year, falling to 28.13% after 5 years. Source: TD 93/142 minimum residual values, ATO, last updated 14 July 2021.
What happens if I leave my job during the lease?
The novation agreement links the lease to your employment, so if you leave, the employer’s obligations usually end and the lease passes back to you. You then make the payments from your after-tax pay, or arrange for your new employer to take it on. Check your agreement for the exact terms and any fees.