FBT Novated Lease Calculator AU 2025-26

What this calculator works out

A novated lease moves a car payment from your post-tax pay into pre-tax salary sacrifice — but the trade-off is fringe benefits tax (FBT) charged to your employer at 47% of a "grossed-up" taxable value. Most salary packagers configure the lease so the FBT is either fully covered by post-tax employee contributions (the employee contribution method) or eliminated entirely under the EV / FCEV exemption. Either way, knowing how much FBT the lease theoretically attracts is the only way to compare offers honestly.

This calculator estimates FBT for FY 2025-26 under both ATO methods:

1. Statutory formula method — 20% of the car's base value × days available, then grossed up and taxed at 47%. Used by default for most low- to medium-business-use leases.
2. Operating cost method — actual annual running costs × (1 − business use %), grossed up and taxed at 47%. Requires a 12-week logbook; usually wins for high business use.

It also applies the EV / FCEV exemption (vehicles below $91,387 fuel-efficient LCT threshold first held from 1 July 2022) and the PHEV transitional exemption for binding pre-existing commitments in force on 31 March 2025.

The result is a general estimate for comparison — confirm with your salary packager and the ATO before signing any novated lease.

The formula and where the rates come from

All rates and thresholds are from ATO — FBT rates and thresholds and the ATO car FBT pages.

Statutory formula (s 9 FBTAA 1986):

baseValue       = car cost (incl GST + LCT) + delivery + dealer-fitted accessories
                  (exclude rego, stamp duty, on-road costs)
taxableValue    = baseValue × 0.20 × (daysAvailable / 365) − employeeContribution(post-tax)
grossedUp       = taxableValue × 2.0802 (Type 1) or × 1.8868 (Type 2)
fbtPayable      = grossedUp × 0.47

Operating cost (s 10 FBTAA 1986):

operatingCosts  = lease + fuel + maintenance + rego + insurance + deemed
                  depreciation/interest (where employer owns)
taxableValue    = operatingCosts × (1 − businessUse%) − employeeContribution
grossedUp       = taxableValue × 2.0802 / 1.8868
fbtPayable      = grossedUp × 0.47

EV / FCEV exemption (s 8A FBTAA 1986, from 1 July 2022):

• Battery EV or hydrogen fuel-cell vehicle.
• First held and used on or after 1 July 2022.
• Retail value at or below the fuel-efficient LCT threshold = $91,387 for FY 2025-26.
• PHEV: exemption ENDED for new commitments on 1 April 2025; preserved only for vehicles already provided as exempt benefits on 31 March 2025 with a binding commitment to continue.

The grossed-up value of an exempt EV is still reported as a Reportable Fringe Benefit on the employee's payment summary, which can affect Medicare levy surcharge, HECS-HELP repayment income, Centrelink income tests and the Division 293 super tax.

How to read the inputs

• Vehicle type — picks the right exemption rule. PHEV reveals the transitional commitment toggle.
• Base value — the cost of the car including GST and LCT and any dealer-fitted accessories or delivery, but not registration, stamp duty or on-road costs (which are explicitly excluded by the FBT rules). For a $50,000 drive-away novated lease the base value is typically around $45,000.
• Days available — defaults to 365 for a full FBT year (1 April to 31 March). Reduce if the car was acquired or returned mid-year.
• Post-tax (ECM) contribution — money from your take-home pay that the packager applies as an employee contribution. Match this to the statutory taxable value to drive FBT to zero.
• Operating costs — only used by the operating cost method. Include lease payments, fuel, maintenance, rego and insurance for the year.
• Business use % — the share of total kilometres driven for work purposes. Requires a valid 12-week logbook to use the operating cost method.
• Gross-up type — almost always Type 1 (2.0802) for a packaged car where GST is creditable. Type 2 (1.8868) applies for GST-free or non-creditable benefits.
• Vehicle first held from 1 July 2022 — required for both the EV / FCEV exemption and the PHEV transitional rule.

Worked examples

1. ICE car, no ECM, statutory formula. $50,000 base value, 365 days, Type 1 gross-up, no ECM. Statutory taxable value = $50,000 × 0.20 = $10,000. FBT = $10,000 × 2.0802 × 0.47 ≈ $9,777 / year. Most packagers will apply ~$10,000 of post-tax ECM to drive this to zero.

2. ICE car with full ECM — FBT zero. Same car, $10,000 of post-tax employee contribution. Statutory taxable value = max(0, $10,000 − $10,000) = $0. FBT = $0. The employee's take-home pay is reduced by $10,000 a year (post-tax) but they still benefit from salary sacrificing the lease payment from pre-tax pay.

3. EV under the LCT threshold — exempt. $70,000 BYD or Tesla Model 3, first held in FY 2024-25, no ECM. EV exemption applies → FBT $0, no ECM needed. The grossed-up notional value of about $14,560 is still reportable as an RFB but no FBT is paid.

4. EV above the LCT threshold — not exempt. $100,000 luxury EV (e.g. Polestar 4 long range). Above $91,387 → exemption fails → standard FBT applies. Statutory FBT = $100,000 × 0.20 × 2.0802 × 0.47 ≈ $19,554 / year. ECM of about $20,000 would be needed to zero the FBT.

5. PHEV — old vs new commitment. Same $60,000 PHEV. With a binding commitment in force on 31 March 2025 → FBT $0 while the lease runs. New PHEV lease entered into on 5 April 2025 → standard FBT applies → ~$11,733 / year, typically zeroed with ECM.

6. High business use — operating cost wins. $50,000 ute, 80% business use, $20,000/year operating costs. Statutory FBT ≈ $9,777. Operating cost taxable value = $20,000 × 20% = $4,000 → FBT ≈ $3,911. Operating cost method saves about $5,866/year, but requires a logbook.

7. Type 2 gross-up. Where the employer cannot claim a GST credit on the lease (rare for novated leases but common for some health-sector employers), Type 2 (1.8868) applies. Same $50,000 ICE car: FBT = $10,000 × 1.8868 × 0.47 ≈ $8,868 / year, about $909 less than Type 1.

Common pitfalls

• The 20% statutory formula sounds small — but it is grossed up. People see 20% × $50,000 = $10,000 and think the tax is $4,700. It is not — the grossed-up value is $20,802 and the FBT is $9,777, almost twice the unfactored amount.
• Base value excludes rego and stamp duty. A $50,000 drive-away price typically has a base value closer to $45,000 once on-road costs are stripped out. Salary packagers will calculate this correctly; sense-check it on the lease quote.
• The EV exemption is silent on running costs. Even for an exempt EV, electricity, charger installation, insurance, registration and tyres are still legitimate lease items. The exemption removes the FBT, not the lease cost.
• Reportable Fringe Benefit hits other tests. An exempt EV or a fully-ECM'd ICE car still shows up on your payment summary at the grossed-up value and can affect MLS, HECS, Centrelink and Division 293 super tax. People with HECS debts often see a noticeably higher repayment income.
• PHEV transitional rule is narrow. It only preserves exemption where the PHEV was provided as an exempt fringe benefit on 31 March 2025 AND there is a financially binding commitment to keep providing it. A simple lease re-financing or change of employer typically breaks the chain.
• Operating cost requires a 12-week logbook. Most novated leases default to statutory because no logbook is kept. If you have high business use, the upside of operating cost is large — but you must keep the logbook in the FBT year (or use one from up to 4 prior years if your driving pattern has not materially changed).
• Salary packagers add fees. The numbers above ignore monthly admin fees, balloon shortfalls and end-of-lease purchase costs, which can material­ly alter the breakeven vs buying outright.
• Deemed depreciation differs. For employer-owned vehicles, the operating cost method deems depreciation at 25% (or 18.75% for cars purchased before 1 April 2008) and interest at the FBT statutory benchmark rate. Novated leases are commonly treated as operating leases for the purposes of operating cost — the lease payment itself counts as the operating cost.

Related calculators

• Novated Lease (EV) Calculator (AU) — focused EV exemption case.
• Salary Sacrifice Super Calculator — alternative pre-tax packaging.
• Division 293 Extra Super Tax Calculator — RFB amount lifts Division 293 income.
• HECS-HELP Repayment Calculator — RFBs lift HECS repayment income.
• Working Holiday Tax Calculator — for non-resident comparisons.

Sources:

• ATO — FBT on cars, other vehicles, parking and tolls
• ATO — Statutory formula method
• ATO — Operating cost method
• ATO — FBT exemption for electric cars
• ATO — FBT rates and thresholds
• Fringe Benefits Tax Assessment Act 1986