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How to Use the Novated Lease Calculator: Step-by-Step Guide

The novated lease calculator helps you compare the real-world costs and benefits of a novated lease against practical alternatives such as paying cash, using a car loan, or keeping your current vehicle.

It is a fully web-based, interactive calculator. Results update automatically as you change inputs. Most fields include an information tooltip ⓘ — hover or tap for explanations, definitions, and common pitfalls.

Step 1: Enter Basic Information (Left-Hand Input Panel)

Before starting, gather the following information about the vehicle and your personal finances.

Vehicle details

  • Vehicle type
    Select EV or non-EV. Plug‑in hybrids should be entered as non‑EV, as they no longer qualify for FBT exemption from 1 April 2025 onward.

  • Vehicle condition
    Choose between new, used (dealer sale), or used (private sale).
    This selection is important as it determines GST treatment and EV FBT eligibility.

  • FBT base value
    The value used for Fringe Benefits Tax calculations.
    Often labelled as vehicle value, vehicle RRP, or vehicle subtotal (Tesla terminology).
    If not explicitly listed, derive it by subtracting stamp duty, registration, and compulsory third‑party insurance from the drive‑away price.

  • Drive‑away price
    The total amount you would pay if purchasing the vehicle outright with cash.

  • Estimated market value at 5 years
    Even if your lease or loan term is shorter, the calculator requires a 5‑year estimate and will interpolate the value to your chosen end date.

Your financial details

  • Total taxable income
    Your full taxable income across all sources, after deductions.

  • Home loan offset interest rate

    • If using a personal home loan offset: enter the actual loan interest rate.
    • If using a investment property offset or savings account: enter the post‑tax equivalent interest rate (after marginal tax + 2% Medicare levy).
    • If the cash source is non‑income‑producing: enter 0%.
    • If the cash would otherwise have been invested in other assets (e.g. shares): While you could use an estimated post-tax return for this calculation, I discourage doing so. Equity returns are highly variable over a 1–5 year horizon, and a fixed assumed return may create a misleading sense of precision. Properly modelling this would require incorporating negative-return scenarios, which is not supported in this calculator.

  • Super guarantee calculated from pre‑NL income
    This is usually Yes, but I strongly recommend confirming with payroll.
    If your employer calculates super on post‑NL income, this can result in a substantial long‑term loss in super contributions.

Lease details

  • Documentation fee
    Enter the amount shown on your quote, or $0 if not applicable.

  • Lease start date
    Automatically set to approximately one month from today's date.
    This is used to accurately account for financial‑year and FBT-year boundaries.

  • Lease duration
    Select between 1 and 5 years. Fractional terms (e.g. 13‑month leases) are not supported.

  • Vehicle lease (per fortnight)
    Enter the figure from your quote.
    If you do not yet have a quote, a placeholder corresponding to an effective interest rate of ~8–12% is a reasonable approximation for most mainstream providers.

  • Luxury Vehicle Adjustment (per fortnight)
    Only relevant for vehicles above the vehicle cost limit ($69,674 for FY2025–26).
    This is an employer‑imposed accounting adjustment.
    Further explanation is available here.

Annual running costs

Include fuel or electricity, servicing, insurance, registration, tyres, and other expected costs.

  • Use figures from your quote if you want the calculator’s outputs to match your lease exactly.
  • Confirm whether your employer passes on GST savings.
  • Electricity should be left at the default value, which is automatically calculated as 4.2 cents × annual kilometres, in line with the ATO’s standard EV electricity claim method.
    • If you will charge mostly at commercial charger and intend to claim actual commercial charging fees instead of the 4.2c/km method, you may enter the estimated commercial charging cost here (if it exceeds the amount derived using the 4.2c/km method).
    • In all other circumstances, do not enter your actual electricity expense here — that is handled separately in the subsequent Electricity section.

Electricity section (for EV)

  • Enter the electricity tariff cost (AUD per kWh) and the vehicle efficiency (Wh/km).
  • If you are unsure, just leave it at the default value.
  • You could alternatively enter an "annual charging cost" if you have a more accurate estimate (e.g. if you frequently charge at commercial chargers).

General notes

  • Pay close attention to whether values are inclusive or exclusive of GST.
  • Ensure you enter fortnightly vs annual figures correctly.
  • If your quote is monthly, convert to fortnightly by multiplying by 12 and dividing by 26.
    Do not divide by 2, as this introduces inaccuracy.
  • To convert fortnightly running costs to annual running costs, multiply by 26.

Step 2: Enable Optional Comparisons

By default, the calculator compares novated lease vs cash purchase.

You may optionally enable:

  • Compare with car loan, or
  • Compare with keeping current car

Once enabled, enter the additional required details for those scenarios.

Step 3: Review the Summary Tab

The Summary tab provides a high‑level overview of outcomes across each pathway.

  • Cashflow and liability positions are compared side by side.
  • When comparing against keeping your current car, the vehicle asset value is included.
  • If your lease or loan term is shorter than 5 years, you can choose whether results are evaluated at:
    • the 5‑year mark, or
    • the end of the lease/loan.

Step 4: Review the Details Tab

The Details tab contains the full underlying breakdown:

  • Basic information
    Key derived figures such as amount financed and residual value.

  • Section 1 – Lease payments
    Pre‑tax deductions, take‑home impact, totals, and year‑by‑year breakdowns.

  • Section 2 – Financial summary
    Complete cashflow, asset, and liability modelling for each pathway.

  • Section 3 – Effective interest rate
    Back‑calculated interest rate implied by your lease, with optional amortisation schedule.

  • Section 4 – Adjusted taxable income
    Estimated ATI after novated leasing (relevant for HECS, childcare subsidy, Medicare levy surcharge, etc).

  • Section 5 – Super guarantee
    Quantifies potential super losses if contributions are calculated on post‑NL income.

  • Section 6 – Rate sensitivity check
    Sensitivity testing against a hypothetical lease priced at a wholesale finance rate (e.g. ~7% according to an industry insider).

  • Section 7 – Early termination risk Illustrates the worst-case additional cost if a novated lease ends early (e.g. redundancy), compared with buying the car outright with cash. A graph indicates the timepoint where early termination may result in novated lease being worse than cash purchase.

Other Features

  • Reset button
    Resets all inputs to default values (based on my own 2023 lease).

  • Copy link
    Generates a URL containing your current inputs, useful for sharing with a partner or online forum.

  • Quotes
    Save and reload scenarios within the same browser and device.
    To transfer between devices, use Copy link as a workaround.

Important Tips and Common Pitfalls

  • Lease payments are not automatically generated — always enter a real quote or realistic estimate.
  • The estimated market value at lease end materially affects results — use a realistic assumption.
  • Always include all income sources and any pre-existing deductions when entering taxable income.

Final Notes

  • This calculator is designed to provide transparent, apples‑to‑apples comparisons.
  • Its accuracy depends on reasonable assumptions and correct inputs. You are solely responsible for incorrect inputs resulting in incorrect outputs.
  • Treat the output as decision support, not financial advice.
  • Consider other risks (job security, exit risk, subsidy impact, borrowing capacity) alongside the numbers.

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: