Novated lease residual values (ATO minimums)

The residual, or balloon, is the amount left to pay when the lease ends. For cars, the ATO’s minimums come from Taxation Determination TD 93/142: 75% of the car’s cost, reduced in a straight line over an 8-year effective life.

Minimum residual as a percentage of cost, cars (8-year effective life), leases entered into after 30 June 2018
Total lease period	Minimum residual	On $50,000 financed	Monthly payment at 8%
1 year	65.63%	$32,815	$1,702
2 years	56.25%	$28,125	$1,169
3 years	46.88%	$23,440	$982
4 years	37.5%	$18,750	$882
5 years	28.13%	$14,065	$817

Example: a $55,000 car less the GST credit the financier claims ($5,000), payments monthly in advance, GST on payments excluded. 8% is an example rate, not a market rate.

The formula

TD 93/142 expresses the table as: minimum residual = 75% − (75% ÷ effective life) × total leased period. For a car, 75% ÷ 8 = 9.375 points a year, so 3 years gives 75 − 28.125 = 46.875%, published as 46.88%.

Why a lower residual is not cheaper

A smaller balloon means you repay more of the car during the lease, from pre-tax salary, so fortnightly payments rise. A larger balloon lowers the payments but leaves more to pay at the end with after-tax money. The ATO minimum sets how far that second route can go.

Check how your quote states the residual (with or without GST), and whether it is worked out on the car’s price or on the whole amount financed. The calculator takes it as a percentage of the amount financed.

General information only. This is an estimate built from the ATO’s published rates and formulas and the numbers you enter. It is not financial advice, tax advice or credit assistance, and it does not recommend any lease, loan, lessor or lender. Your employer’s and your financier’s figures are the ones that count. Read the disclaimer.

Frequently asked questions

Can I choose a lower residual than the ATO table?

Only where a well-considered and fair estimate of the car’s likely market value at the end of the lease is lower (TD 93/142, para 4). Otherwise the table is the minimum.

Does a longer lease always lower the residual?

Yes: each extra year takes 9.375 percentage points off (75% ÷ 8 years of effective life). The table counts the total leased period, so a 1-year lease followed by a 2-year lease on the same car uses the 3-year figure.

Is the residual paid with pre-tax money?

Not in the model used on this site: the residual sits outside the salary-packaged payments and is paid at the end of the lease. Check the end-of-lease options in your contract. If you re-lease the same car instead, that is a new commitment for FBT, taxed under the rules in force on that date.

Official sources

TD 93/142 – minimum residual values for leased assets (table at para 3A) — ATO legal database, last amended 14 July 2021.
Car thresholds from 1 July (car limit $69,883, GST credit cap $6,353) — ATO, published 9 June 2026.

All sources checked on 1 October 2026.

Page updated 1 October 2026.