Novated lease - the checklist
Almost everything this site covers, in one list. Use it while you compare quotes and again before you sign. Tick items off as you go and use the notes to record what you found.
Start here: 7 checks that decide most outcomes
If you only do a few checks, do these. Each one is quick, and each can be worth thousands of dollars. The full list follows below.
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A novated lease is a three-way arrangement with your employer, so it only exists if they agree to it. Sole traders and contractors generally cannot salary-package.
Ask HR or payroll whether the employer offers one, which providers they use (the panel), and whether you may bring your own finance (BYO). The terms differ between employers.
What is a novated lease? · Is it worth it? · Employer BYO checker
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It changes how you read every quote. One example on this site: a quoted $21,320 “saving” turned out to be a $5,591 loss.
Most providers measure "savings" against a strawman: the same lease paid with post-tax money and no GST saving, which nobody would actually do. This site’s calculator instead simulates your cashflow, assets and liabilities against realistic alternatives.
A $21,320 "saving" that was a $5,591 loss · Why "tax saved" is the wrong metric · 20 calculators reviewed
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This is the real go or no-go question. It tells you whether to lease at all, not just which lease to pick.
There are two different meanings of "saving". Saving against buying the same car with cash or a loan can be real value, but it does not tell you whether you are better off than simply keeping your current car, which is traditionally the cheapest option. With an FBT-exempt EV that is no longer always true, so be clear which benchmark you are using. This site’s calculator lets you make both comparisons, so you can pick the appropriate frame of reference.
Two ways people define "saving"
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It is the biggest negotiable item. Readers have taken it back to their provider and negotiated several percentage points off, saving thousands.
Do not rely on a "base rate" or the quoted comparison rate. Smartleasing and MillarX quotes need the calculator’s built-in adjustment first, or the rate comes out falsely high.
Calculator · Why rates look high · Smart / MillarX adjustment
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This is how you act on the interest-rate check. BYO often comes at a much lower effective rate, and it is rarely advertised.
With a panel, show each provider the others’ quotes. Compare on the same kilometres and budgets, and compare the vehicle lease line, the amount financed and the residual, not the total fortnightly deduction. With BYO, you arrange the finance and your employer’s salary packaging company keeps doing the payroll.
How to read a quote · Employer BYO checker
Notes
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On post-lease salary you lose 12% of everything you sacrifice, which can exceed $10,000 over an EV lease.
It is a simple question for payroll, and the answer is easy to miss in a quote. Check again after any payroll change, such as Payday Super from 1 July 2026. If payroll uses the post-lease salary, consider raising it with your employer (check your award or enterprise agreement first), and/or count the lost super in your overall comparison: the calculator’s super guarantee section estimates it.
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The savings only materialise if the lease runs to its natural end. If it does not, the remaining payments and the residual become due post-tax, plus GST.
Job loss without a new employer to take the lease, illness, a write-off, a change of mind, going contractor or sole trader, or moving overseas can turn a good deal into a bad one. Section 7 of the calculator shows what that means at each point in the lease. Under the draft, taking the lease to a new employer after 1 April 2027 is a new commitment on the new rules. Even so, it is a bet that pays off on average, with some chance of a worse outcome.
Early termination · Worked examples · Think like a gambler
Notes
1. Eligibility and timing
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The FBT treatment changes the economics so much that the two are effectively different products.
A petrol, diesel or hybrid lease must pay part of the lease from post-tax salary to cover FBT, which removes much of the benefit. Compare them before settling on a non-EV. This is purely a suggestion based on the difference in tax treatment, and naturally does not take into account what you need in a vehicle.
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A two- or three-year-old EV can keep most of the saving while skipping the steepest depreciation.
Many people assume a novated lease is only for a new EV. It is not: a used EV that was first held and used on or after 1 July 2022, and never had Luxury Car Tax payable, gets the same FBT exemption as a new one.
Notes
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Delivery after the cut-off could, in theory, cost you the full FBT exemption on a car over $75,000.
The draft legislation tests when the lease becomes binding, which may give some relief, but it is not yet law. When the plug-in hybrid exemption ended in 2025, the car had to be delivered before the cut-off date. Having it delivered before 1 April 2027 is the safest position. For example, a $75,001 car purchased today but delivered on 2 April 2027 carries some theoretical risk.
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An ineligible used EV loses the FBT exemption, and an over-age car may not get finance.
For leases committed before 1 April 2027: first held and used on or after 1 July 2022, and LCT never payable. Most financiers also want the car under 10–12 years old at the end of the lease.
Notes
2. The quote and the finance
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The headline number mixes the car’s value with your cash.
On this site, the overall saving or loss is net worth: the car’s value, your cashflow and your liabilities added together. An option that comes out $2,000 ahead may mean a car worth $12,000 more but $10,000 less cash in hand. That is accurate as net worth, but it may not suit your cashflow or how much cash you need to keep available.
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Every number in the result rests on an assumption that can turn out differently.
It compares your financial position at a single point, either the five-year mark or the end of your lease, using the figures and assumptions you entered: resale value, offset rate, running costs, and the lease running to term. It says nothing about what happens after that point.
Calculator limitations · How to use the calculator
Notes
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Extras hidden in the amount financed attract interest for the whole lease.
It should be roughly the drive-away price plus the documentation fee, minus the GST saving (up to $6,353). If it is higher, find out exactly what the difference is: it is often add-ons you did not ask for.
Notes
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Financed insurance costs interest and makes an early-termination payout bigger.
As a running cost it does neither.
Insurance bundled into finance · Early termination: worked examples
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Add-ons add cost, and financed ones also make early termination worse.
Dent and paint protection, dash cams, tint, small-damage repair and similar packages often have commission built in, so you may get them cheaper outside the lease, though you do pay for them with post-tax dollars. The same goes for running-cost extras such as roadside assistance or a carbon offset.
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The right length differs for FBT-exempt and FBT-applicable leases.
For an FBT-exempt EV, a longer lease usually saves more, but leaves you more exposed if the lease ends early. A shorter lease costs more borrowing capacity, but generally reduces the potential loss on early termination, and is traditionally the more optimal approach for FBT-applicable leases. Tip: if you expect to drive 30,000 km a year or more, ask for a lower residual at the start. It cannot be changed later.
Choosing the lease length · Asking for a lower residual
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3. Running costs and insurance
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A low budget makes the quote look cheaper, but you pay the difference back in top-up deductions.
The budget is your own pre-tax money set aside and claimed back, and it always trues up to what you spend: a refund if you over-budget, top-ups if you under-budget.
Running costs are a piggy bank
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Setting it to zero is always worse financially than claiming any amount.
Claiming the ATO rate (5.47c/km) puts extra money in your pocket even if your charging is cheap or free. Removing it is a common mistake. If this sounds counter-intuitive, please read the linked article for the financial mechanism.
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The wrong claiming method can leave money on the table if you often charge away from home.
Commercial charging invoices, or the mixed method (home km at 5.47c plus commercial invoices) if your car records the home/away split, can beat the 5.47c/km shortcut. Budget for it.
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If your employer keeps the GST saving, every running cost is about 10% dearer.
Some employers keep it. It is employer policy, so there is usually little you can do, but count it in your figures.
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Provider policies often carry commission, and thin cover can leave you out of pocket after a write-off.
Check what a write-off would leave you owing: once any new-for-old period ends (check your policy), a default agreed value can leave $10,000 or more unpaid. Gap or total-loss cover, or a higher agreed value, closes that gap at a price.
Write-off example · Premium vs excess
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4. Your pay and the bigger picture
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It can cut your borrowing capacity by two to three times the car’s value, which matters if a home loan is coming.
You cannot simply end the lease later to get that capacity back without a significant loss. If a home loan is in the near future, give your mortgage broker the lease quote and ask them to run your capacity with and without it.
Notes
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Income tests use a figure that the lease can raise, even though your taxable income falls.
An EV lease lowers taxable income but usually raises adjusted taxable income. This often means less childcare subsidy, higher HELP repayments and child support, and a higher chance of paying the Medicare levy surcharge or Division 293 tax.
RFBA explained · HECS/HELP · Childcare subsidy
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Payroll can under-withhold HELP, which can leave a large, unexpected tax bill.
Payroll withholds HELP from your reduced salary, but the ATO assesses it on an income that adds your reportable fringe benefits back. Because of this gap in the PAYG withholding assumptions, the difference is only collected at tax time. Work out the expected effect with the adjusted taxable income section in the calculator (Details tab, section 4). To avoid the shock, ask payroll to withhold the correct amount, or set the difference aside in your own bank account.
Novated leases and HECS/HELP · Calculator
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Counting a benefit you already had as new saving overstates what the quote is worth.
If you could already use the $9,010 / $15,900 cap on living expenses, packaging the car under it moves that benefit rather than adding one.
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Your real saving is lower than the headline figure.
NSW Health keeps part of the tax saving on all salary packaging, including novated leases. Tip: if you also have separate employment with another organisation, strongly consider doing the novated lease through that employment instead, so you don’t lose part of the saving to the employer share. Reminder: the tax saving depends on your TOTAL taxable income, not just that job’s income, so it does not matter if the other employment only pays $30k.
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5. Risk and the exit
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The lease payments still fall due when your pay stops.
Parental leave or other unpaid leave stops the salary deductions.
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The extension may not get the treatment the original lease had.
Under the 2026 draft, the extension falls under whatever rules apply when you extend. The residual on an extension must also follow the original ATO table, not "65.63% of 65.63%".
What ends your grandfathering · Residuals on extensions
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It protects the downside but eats into the saving, so weigh its cost against the risk.
Compare its total cost, including interest if financed, with the risk it covers.
Notes
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You will need the cash, or a plan, when the residual falls due.
Pay it out (GST-inclusive), sell the car, refinance, or start a new lease. A new lease later is a new commitment and may be on less favourable FBT rules.
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6. Before you sign
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A re-issued quote can quietly bring back something you removed.
Check the price, kilometres, budgets, residual and lease payment, and that the add-ons you removed stay removed.
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Stamp duty and transfer fees left out of the finance come out of your own post-tax money.
A used-car invoice often leaves out stamp duty and the transfer fee. Get them into the amount financed. For a private sale, a dealer middleman can recover the GST saving.
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Once finance is approved and the car is ordered, backing out can cost you.
Some quotes carry a cancellation charge. Dealers may set a deposit deadline that a novated lease can struggle to meet.
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A saved quote lets you check your payslips and statements against what was promised.
Use "Copy link" or Quotes.
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I'm backing Dr Michael Keane's fight for salary packaging transparency
Workplaces with an exclusive salary packaging provider tend to have noticeably higher effective interest rates on novated leases — yet the commercial terms behind these exclusive arrangements are rarely disclosed to employees.
Dr Michael Keane, a Melbourne anaesthetist, is taking a Victorian health service to the Victorian Supreme Court to obtain the unredacted contract between the hospital and its exclusive salary packaging provider. The unredacted version may shed light on alleged sign-on fees associated with exclusive access to hospital employees — an arrangement whose financial terms employees are rarely privy to.
To date, Dr Keane has personally spent around $15,700 pursuing this case, with further legal costs anticipated. I believe this matters to anyone in a workplace with an exclusive provider. If you agree, consider supporting his 
GoFundMe.
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Many people have asked me that. I do not serve ads or sell leads to novated lease companies.
It is an original financial model, built from scratch and maintained over hundreds of hours. Yet everything is free. That is deliberate: I want as many people as possible to see through the industry's sales maths. I would rather help many more people than squeeze a few extra bucks out of it by charging admission at the door.
That said, I believe in its value. With motivated readers, we have helped keep novated lease companies honest and pushed back on dishonest practices. Many have taken the effective interest rate back to their provider, negotiated several percentage points off, and saved thousands. Others gained clarity, mitigated risks, or talked themselves out of an expensive mistake.
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