Novated Leases — A Practical Reference Guide

I’m the author of a free, comprehensive Australian novated lease calculator and have been answering questions about novated lease on Reddit, Facebook, and other forums since 2023. This guide collects and organises the common explanations I’ve shared repeatedly into one self-contained resource.¹

• Start here

  Key introductions and mental models to get you started.

  • What is a novated lease — really?
  • Why EV and ICE novated leases are functionally different products
  • Is a novated lease right for me?

• Mechanisms explained

  Understand the financial mechanics behind novated leases.

  • Why “tax saved” is the wrong way to evaluate a novated lease
  • Why are novated lease effective interest rates sky high — yet may still work
  • FBT, RFBA, and adjusted taxable income — explained clearly
  • All about residual values
  • How to use the novated lease spreadsheet (and what it can and cannot tell you)

• Running costs & claiming

  Practical info on managing running costs and claiming benefits.

  • Running cost budgets are a “piggy bank”
  • The ATO 4.2c/km EV charging shortcut — how it actually works
  • Failure to pass on GST savings — an overlooked cost in some novated leases

• Risks & exit strategies

  What to consider about risks and ending your lease early.

  • Overview
  • Lease length, residuals, and risk: choosing the right duration
  • What happens if a novated lease ends early - redundancy, job transfer, vehicle write-off etc
  • Early termination payouts: how bad can it get?
  • Risk mitigation strategies for early termination risk

• Special cases & policy

  Edge cases and policy insights that affect novated leases.

  • Overview
  • Novated leases, adjusted taxable income, and childcare subsidy — a deep dive
  • Don’t double count the hospital / NFP FBT cap when judging a novated lease
  • Super guarantee and payroll risks
  • NSW Health’s “Employer Share”: A Special Case in Novated Lease
  • EV FBT exemption review timing — what is known, what is not, and why it matters
  • Why novated leasing is poorly regulated

• About

  More about me, story behind this guide and general disclaimer

  • Who I am and how I became "that novated lease guy"
  • Disclaimer

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Optional Support

Both this guide and the spreadsheet are free. If they prove helpful, consider:

• Using my Tesla referral link for a $350 discount if you’re ordering a Tesla, or
• Buying me a cuppa at BuyMeACoffee.com

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1. I used LLM to help synthesise 70 of my old comments into this guide. Everything was checked and rewritten by me to keep my usual style as much as possible, though some LLM-style and infamous em-dash may remain. All contents are mine and there is no machine-hallucination. ↩