Novated lease or car loan? Three worked profiles

Same car, same term, same running costs, three ways to pay. Every profile ends with the car fully paid, so the totals compare like with like. Each uses a 5-year term, 8% for both the lease and the loan (example rates, not market rates), the ATO minimum residual and the calculator’s example running costs unless stated.

Nurse, $85,000, electric car at $48,000

Middle income, cheaper EV, lease signed before April 2027. Rule applied: FBT-exempt electric car (current law).

Nurse, $85,000, electric car at $48,000: cost over 5 years
	Per fortnight	Total over 5 years
Novated lease	$323	$54,315 incl. $12,275 residual
Car loan	$607	$78,896
Cash	$158 + $48,000 upfront	$68,500

The lease comes out $24,581 ahead of the loan over the term , with no after-tax contribution because the car is FBT-free. Tax and Medicare levy saved: $3,957 a year. Reportable fringe benefits: $18,113 a year.

Engineer, $140,000, petrol SUV at $52,000

Higher bracket, no electric car concession. Rule applied: Petrol, diesel or hybrid: 20% statutory formula.

Engineer, $140,000, petrol SUV at $52,000: cost over 5 years
	Per fortnight	Total over 5 years
Novated lease	$531	$82,357 incl. $13,298 residual
Car loan	$725	$94,262
Cash	$238 + $52,000 upfront	$83,000

The lease comes out $11,906 ahead of the loan over the term , after $10,400 a year paid from after-tax pay to cancel FBT. Tax and Medicare levy saved: $2,121 a year. Reportable fringe benefits: $0 a year.

Manager, $200,000, electric car at $88,000, signed May 2027

Top bracket, EV above $75,000, proposed 25% discount. Rule applied: Proposed: 25% FBT discount.

Manager, $200,000, electric car at $88,000, signed May 2027: cost over 5 years
	Per fortnight	Total over 5 years
Novated lease	$682	$111,610 incl. $22,967 residual
Car loan	$1,012	$131,559
Cash	$188 + $88,000 upfront	$112,500

The lease comes out $19,949 ahead of the loan over the term , after $13,200 a year paid from after-tax pay to cancel FBT. Tax and Medicare levy saved: $4,016 a year. Reportable fringe benefits: $8,301 a year.

What the comparison leaves out

What your cash could earn: paying cash ties up the whole price on day one. Its cost is the interest or return you give up, which the totals above do not include.
Leaving your job: the novation ends and you carry the lease yourself, from after-tax pay, or pay it out. A loan does not depend on your employer.
Fees and margins: quotes may include establishment fees, management fees and a margin on running costs. Enter them in the calculator; they can erase a small advantage.
Income tests: the reportable fringe benefit raises your income for HELP repayments, the Medicare levy surcharge and family payments. For an FBT-free electric car it is 20% of the base value × 1.8868 each year.

Run your own case in the calculator, with your quote’s rate, fees and running costs.

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

Is a novated lease worth it?

It depends on three things: whether the car gets an FBT concession (electric cars under current law do; petrol cars and new PHEV leases do not), your marginal tax rate, and the lease’s interest rate and fees compared with a loan. The worked profiles on this page show all three cases.

Why does a petrol car still save tax?

The pre-tax part of the package saves income tax, and the GST credits claimed on the car (by the financier) and on the running costs (by your employer) lower the cost. The after-tax contribution (20% of the base value a year) claws much of that back, so the margin depends on your tax rate and the lease’s rate.

Does this page recommend a lease or a lender?

No. It compares generic structures with the same example inputs. It does not rate or recommend any lessor, lender, salary-packaging provider or product, and it receives nothing from any of them.

Official sources

Electric cars exemption — ATO, page updated 1 April 2026.
Sustainable fringe benefits tax treatment of electric cars – consultation, exposure draft "Treasury Laws Amendment Bill 2026: Phased changes to the FBT electric car exemption" and explanatory materials — Treasury, consultation closed 28 September 2026.
Taxable value of a car fringe benefit (statutory formula, base value) — ATO, page updated 6 March 2025.
GSTR 2001/3 – GST and fringe benefits (GST on employee contributions) — ATO legal database, read on 1 October 2026.
Car thresholds from 1 July (car limit $69,883, GST credit cap $6,353) — ATO, published 9 June 2026.
TD 93/142 – minimum residual values for leased assets (table at para 3A) — ATO legal database, last amended 14 July 2021.
Tax rates – Australian residents — ATO, page updated 13 August 2026.

All sources checked on 1 October 2026.

Page updated 1 October 2026.