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Novated Lease Calculator (Australia)

Independent Australian novated lease calculator to compare novated lease vs cash purchase vs car loan vs keeping your current car, focused on your real net financial outcome — not just headline “tax saved” figures that can be misleading.

Built and maintained by an independent Australian specialist doctor with formal training in statistics and a competitive mathematics background — not affiliated with any financier or novated lease / salary packaging company.

How to use this calculator

Quick start below — or read the full walkthrough for detailed guidance.

If you have a quote: Enter your vehicle price, lease details, annual kilometres, and financial details based on the quote. The calculator then models the cashflow, asset and liability over the lease period and compares your overall financial position across different funding options.

If you do not have a quote: Look up the vehicle’s base and drive‑away price online, estimate typical running costs, choose a lease term (1–5 years), and enter a fortnightly lease amount consistent with an effective interest rate of roughly 8–12% (a common market range). This will give you a reasonable ballpark estimate of the overall financial outcome.

Unlike most novated lease calculators, the outputs focus on net outcomes — how much better or worse off you are overall — rather than isolated tax figures.

Support this independent calculator & guide

This calculator and guide are built and continuously maintained as an independent project.

If it has helped you think more clearly, avoid a costly mistake, or saved you meaningful money, you’re welcome to support its ongoing maintenance and improvements:

Frequently asked questions

How accurate is this calculator?

This calculator is the direct evolution of a spreadsheet that has been in continuous public use for over two years. It has been widely shared, scrutinised, and informally peer-reviewed by financially literate users, with numerous edge cases tested and minor issues corrected over time.

This web-based version was not a direct port of the spreadsheet; instead it was rebuilt from first principles. Core components — e.g., income tax modelling, Medicare levy calculation, fortnight-by-fortnight opportunity cost modelling, and pre-tax to post-tax cashflow conversion were independently re-derived and implemented in a new calculation engine.

The outputs of this engine were then systematically verified against the original spreadsheet across a broad range of test scenarios. The two implementations match to the cent for all test cases.

No financial model of this complexity can claim absolute infallibility. However, given the independent re-derivation, cross-verification, and sustained public scrutiny, the mathematical integrity of this calculator is likely robust.

For those who value full transparency, the original spreadsheet remains available and exposes the underlying formulae in full. You are welcome to audit the logic yourself.

If you believe you have identified a genuine discrepancy, please feel free to reach out. Serious scrutiny is welcome.

Known limitation (22 February 2026)

A helpful Reddit user pointed out that the post‑four‑year FBT base value discount is not currently applied in the Employee Contribution Method (ECM) and its downstream calculations for FBT‑applicable leases.

In practical terms, for fortnights that fall within FBT years starting more than four years after lease commencement, the ECM post-tax payment should be reduced to two‑thirds of its original amount, with corresponding adjustments to the pre‑tax component. This would result in higher net savings during those periods.

At present, this discount is not reflected in the calculator outputs. Correcting it requires structural changes across multiple sections in this calculator.

This limitation only affects users with FBT‑applicable leases longer than four years which is uncommon as shorter leases are more popular among FBT-applicable leases. When applicable, the true financial saving is higher than what the current version of this calculator displays.

Why doesn’t this calculator display a “tax saving” figure?

You may notice that this calculator does not prominently display a single “tax saved” number — and that is deliberate.

Novated lease providers often emphasise tax savings because it is psychologically compelling. However, tax reduction is only one component of the overall financial equation. A novated lease may also involve higher effective interest rates, management fees, brokerage, GST interactions, and early‑termination risks. Focusing solely on “tax saved” can therefore be misleading as explained in this explanatory article and a fully worked example.

This calculator is designed to model net financial impact i.e. the change in your overall position, rather than isolate one attractive component of the transaction.

If you nevertheless wish to derive the income tax saving component, you may do so manually via:

Output > Details > 1.2 Breakdown by Financial Years

For each financial year, compare the “Income Tax + Medicare Levy” figures before and after the lease. The difference represents the income tax and Medicare levy reduction attributable to the novated lease.

Some quotes also advertise a “GST saving.” This typically consists of two parts:

  • Vehicle purchase GST saving — found in Details > Vehicle GST saved
  • Running cost GST saving — found in Details > 1.1 Summary > Pre‑tax component > Running cost (vehicle lifetime) (multiply this amount by 10%)

However, as emphasised throughout this website, individual tax or GST savings figures are not meaningful in isolation. The relevant question is not “How much tax did I save?” but rather “Am I financially better or worse off overall?”

The net outcome remains the only meaningful decision metric.

Does this calculator work for electric vehicles?

Yes. It supports FBT‑exempt EV novated leases as well as FBT‑applicable non‑EV leases, and highlights how the outcomes differ between the two. It also automatically detects if an EV does not qualify for FBT-exemption, e.g. if the FBT base value is above LCT threshold or if it was first held and used prior to 1/7/2022.

Does it consider childcare subsidy, HECS, or Div 293 impacts?

Yes. For EV novated leases, the calculator estimates the effect of the reportable fringe benefit amount (RFBA) on adjusted taxable income, which can affect HECS repayments, childcare subsidy, and Division 293 tax.

Is this calculator affiliated with any novated lease provider?

No. This tool is independent and is not affiliated with any novated lease company, financier, or employer salary‑packaging provider. While I have gotten to know some industry insiders through my online participation, I do not receive referral fees or kickbacks from any provider.

What are the limitations of this calculator?

Like all financial models, this calculator is a simulation based on explicit assumptions. While care has been taken to make these assumptions realistic and transparent, there are important limitations to be aware of:

  • Primary endpoint is financial position at 5 years. The model assumes that, under a novated lease, the residual value is paid out at the end of the lease. The conclusions may not apply if the residual is rolled over into a subsequent lease. Outcomes may also diverge beyond year 5, as vehicle depreciation, opportunity cost of funds (e.g. offset balances), and financing dynamics can change in both magnitude and direction from year 6 onwards.

  • Home loan interest rate is assumed to be constant throughout the lease duration. If you wish to explore the effect of rising or falling interest rates, you can manually adjust the interest rate inputs to approximate different scenarios.

  • Offset account impact is calculated on a fortnightly basis. In reality, home loan interest is typically calculated daily and charged monthly. The discrepancy introduced by this simplification should be small, but it is not zero.

  • Insurance premiums, registration, and maintenance costs are assumed to remain constant over the lease term. In practice, these costs often change over time.

  • Residual value methodologies vary between leasing companies. The approach used here reflects the most common industry practice, but it may not match every provider exactly.

  • Market value depreciation is interpolated for 1–4 year lease terms. Depreciation rates for both EVs and ICE vehicles change over time, particularly for EVs where rapid technological evolution may accelerate depreciation. The default assumption of ~40% depreciation at 5 years may not remain valid in all market conditions, and users should apply judgment when modifying these assumptions.

  • Running costs are assumed to contain a uniform 10% GST component. This is a simplification. Some real-world expenses contain substantially less GST (for example, vehicle registration). The model assumes GST is always 1/11 of the gross cost.

  • Tyre replacement frequency is not explicitly modelled, and no separate tyre budget is included in the default running cost assumptions.

  • Income tax and Medicare levy calculations do not model partial Medicare levy reductions for singles earning below $34,027. It is assumed that most users considering novated leasing fall above this threshold.

These limitations do not invalidate the calculator, but they do highlight why the outputs should be interpreted as decision support, not precise predictions. Sensitivity testing and judgment remain essential.

Who is this calculator less suitable for?

While this calculator is designed to cover the most common novated lease scenarios faced by Australian employees, it may be less suitable or require extra interpretation for the following groups:

  • Very low‑income earners. At lower income levels, the interaction between income tax, Medicare levy (including partial reductions), and means‑tested benefits can be more complex and less reliably captured by a generalised model.

  • People who frequently roll over novated leases. This calculator models a single lease cycle and assumes the residual value is paid out at the end of the lease. If you routinely roll residuals into subsequent leases, your long‑term outcomes may differ materially from those shown here.

  • People who could otherwise claim work‑related vehicle use outside a novated lease. If you are able to claim deductions for work use of a vehicle under a cash‑purchase or car‑loan pathway (for example via logbook or cents‑per‑kilometre methods), those alternatives may warrant separate modelling and comparison.

  • People considering associate leases. Associate leases have distinct financial consequence that is not modelled here, and outcomes can differ significantly from standard novated leasing arrangements (and may be more advantageous for certain personal circumstances).

  • Company directors or business owners with access to alternative structures. If you operate through your own company or trust and may be eligible for FBT‑exempt vehicle benefits or other business‑specific arrangements, this calculator may not fully capture the options available to you.

In these situations, the calculator can still provide useful context, but the results should be interpreted with additional caution and, where appropriate, supplemented with tailored advice.