Novated leases and HECS/HELP

By changyang1230 · Published 13 October 2026

If you have a HELP (HECS) debt and take out an FBT-exempt EV novated lease, two things tend to happen, in this order:

1. Your first payslip looks better than the quote: take-home pay drops by noticeably less than you were told.
2. At tax time, you get a HELP bill you were not expecting.

Both have the same cause. Your payroll and the ATO use two different income figures to work out your HELP repayment, and an EV novated lease pushes them in opposite directions.

How HELP repayments work

Compulsory HELP repayments are worked out on your repayment income, not your taxable income. Repayment income is:

taxable income + reportable fringe benefits amount + total net investment loss + reportable super contributions + exempt foreign employment income

Elsewhere on this site we call this figure adjusted taxable income (ATI), because it is built the same way. For a novated lease, the only component that matters is the RFBA.

Since 1 July 2025, repayments use a marginal system: you repay a percentage of the income above the threshold, not of your whole income. For 2026–27:

The thresholds are indexed every July. Check the ATO’s current rates for the year you are working on.

The key number is the marginal rate: most salaried borrowers sit in the 15% band, and higher earners in the 17% band.

Surprise 1: why your payslip looks better than your quote

Your employer withholds HELP each payday from the same taxable earnings it uses for income tax, i.e. your salary after the pre-tax novated lease deduction. Reportable fringe benefits play no part in payroll withholding.

Take someone on a $100,000 salary with a HELP debt, who sacrifices $17,000 a year pre-tax for an EV novated lease. Using 2026–27 rates, here is what their employer withholds over a full year:

Take-home pay falls by $9,010 a year, or about $347 a fortnight.

The quote tells a different story. Novated lease quotes generally leave HELP out (as does the calculator, by default). They only count the income tax and Medicare saving:

The ~$98 a fortnight that “appears” on the payslip is simply HELP that payroll has stopped withholding: its formula now sees taxable income of $83,000 instead of $100,000.

In this example the whole $17,000 sits inside the 30% tax bracket and the 15% HELP band, so every dollar sacrificed saves exactly 30% + 2% + 15% = 47c. If your sacrifice crosses a tax bracket or a HELP threshold, the per-dollar figure changes partway through, and the calculator’s year-by-year taxable income is the easier way to work it out.

That extra take-home pay is real cash this payday. It is not a real saving, as the next section shows.

Surprise 2: the HELP bill at tax time

When you lodge your tax return, the ATO works out what you should have repaid using repayment income, which adds your RFBA back on top of your reduced taxable income.

For an FBT-exempt EV, the RFBA is the grossed-up value of the car benefit:

RFBA ≈ base value × 20% × 1.8868 ≈ 37.7% of the car’s base value per full FBT year

(See how RFBA is calculated for the details.) The RFBA is usually larger than the amount you sacrifice from your salary each year, so your repayment income ends up above what it was before the lease, even though your taxable income went down.

Payroll withheld HELP as if your income had gone down. The ATO assesses it as if your income went up. You pay the gap at tax time.

Worked example

This example is based on a real question from a reader.

• Salary (taxable income before the lease): $111,815
• Pre-tax novated lease deduction: $659.24 per fortnight ($17,140 a year)
• EV with a base value of $67,605, so RFBA = $67,605 × 20% × 1.8868 ≈ $25,511 a year
• A full year of 26 pay fortnights, 2026–27 HELP thresholds

The same person has three different HELP figures:

Reading the table:

• On the payslip, HELP withholding drops by about $99 a fortnight ($243.96 → $145.08). That is the “extra” take-home pay compared with the quote: the quote said take-home would fall by $448.28 a fortnight, and it actually falls by about $349.
• At tax time, the ATO wants $7,599 but payroll only withheld $3,772. The shortfall is about $3,827, or $147 a fortnight.
• The real extra cost of the lease, compared with not having it, is $7,599 − $6,343 = about $1,256 a year in additional HELP repaid. That is about $48 a fortnight on top of the quoted $448.28.

You can open this example in the calculator and see the year-by-year taxable income and adjusted taxable income in the Details tab (sections 1.2 and 4).

Real withholding uses the ATO’s tables rather than this exact arithmetic, so your payslip will not match to the cent, but it should be close.

The first and last year are different

RFBA is worked out per FBT year (1 April – 31 March) and reported on the income statement for the financial year that ends the following 30 June. Your salary sacrifice, on the other hand, follows the financial year.

So if your lease starts partway through the year, the first tax return only carries the RFBA for the part of the FBT year up to 31 March. In the example above, a lease starting on 28 August means the first income statement includes only about seven months of RFBA (28 August to 31 March), so the first year’s RFBA is about $15,100 and the shortfall is about $2,265 instead of $3,827. The full effect shows up from the second year. The final year is uneven in the same way.

The calculator’s adjusted taxable income table (Section 4 of the Details tab) works through these year-by-year differences for you, including the number of pay fortnights in each financial year.

What to do about it

1. Don’t treat the extra take-home pay as spare cash. Set aside roughly your HELP rate × RFBA each year (about $147 a fortnight in the example), or simply the extra amount your payslip shows compared with the quote, plus a margin.
2. Or ask payroll to withhold more. You can ask your employer to withhold extra tax from each pay (the ATO calls this an upwards variation), so there is no bill at tax time.
3. Include the extra HELP in your decision. The quote and the calculator’s take-home figures exclude HELP. Before you sign, estimate the extra HELP (rule of thumb above) and count it as a cost of the lease.
4. Check your remaining balance. Compulsory repayments are capped at what you still owe. If your HELP debt is small, the shortfall is capped too, and the lease may simply clear the debt sooner.

Who this affects, and who it doesn’t

• EV (FBT-exempt) leases: the effects described here apply. The more expensive the car relative to your salary sacrifice, the larger the RFBA and the bigger the gap.
• ICE (non-exempt) leases: usually structured with the employee contribution method, so the RFBA is zero. Repayment income then falls along with taxable income, payroll withholding stays roughly right, and your HELP repayment genuinely goes down. No surprise bill.
• Incomes near the threshold: if the lease takes your taxable income below the repayment threshold, payroll may stop withholding HELP altogether, while your repayment income (with RFBA) is still above it. Then the whole HELP amount arrives as a bill at tax time.
• The same RFBA affects other income tests: childcare subsidy, child support, Division 293 tax, and the Medicare levy surcharge. Unlike HELP, none of these are withheld through payroll, so there is no “surprise 1”, but the extra cost or lost subsidy is just as real.

Key takeaway

With an FBT-exempt EV lease, payroll withholds HELP on your reduced salary, but the ATO assesses it on repayment income including RFBA. Expect a tax-time bill of roughly your HELP rate × RFBA, and budget for it from the first payslip.

Related reading

• FBT, RFBA and adjusted taxable income explained
• Novated leases and the childcare subsidy
• How to read a novated lease quote
• Novated Lease Calculator

Not advice

This page is general information about how HELP repayments interact with novated leases. It is not financial or tax advice and does not take your circumstances into account. Repayment thresholds change every year; confirm your figures with the ATO or your accountant.