Novated Lease EV Calculator AU 2025-26

What this calculator works out

This calculator compares two ways of putting an electric vehicle in your driveway in Australia: a salary-sacrificed novated lease that uses the FBT exemption introduced by the Treasury Laws Amendment (Electric Car Discount) Act 2022, and an outright cash purchase of the same vehicle. It applies the FY2025-26 resident individual tax brackets, the 2% Medicare Levy, the 47% FBT rate for the year ending 31 March 2026, the Type 2 gross-up factor of 1.8868 used to calculate the Reportable Fringe Benefits Amount, the FY2026-27 LCT fuel-efficient threshold of A$91,387 above which the FBT exemption is lost, the FY2025-26 HECS-HELP repayment schedule and the ITAA 1997 s 28 statutory minimum residual values. The output is the monthly take-home in each scenario, the total cost over the lease term, the net saving and any extra HECS-HELP compulsory repayment caused by the RFBA cascade.

The point of the tool is to make the trade-off concrete. The headline FBT exemption is the most generous tax concession in the personal income tax system at the moment — for a Tesla Model 3 packaged on a A$120,000 salary the lease can effectively pay back close to half of the running cost from pre-tax dollars — but the Reportable Fringe Benefits Amount that sits behind the exemption can lift HECS-HELP repayments, the Medicare Levy Surcharge income test, the Division 293 income test and Child Care Subsidy income just as if the benefit had been taxed as cash. The calculator surfaces those edges so the lease can be sized against the LCT threshold, the residual at end of term and the RFBA-driven HECS impact, rather than only the headline FBT saving.

Why the FBT exemption matters for EVs

The Treasury Laws Amendment (Electric Car Discount) Act 2022 amended the Fringe Benefits Tax Assessment Act 1986 to exempt eligible electric cars from FBT when they are first held and used after 1 July 2022 and provided to an employee through a salary-sacrifice novated lease. To qualify the vehicle must be a battery electric vehicle, a hydrogen fuel cell electric vehicle, or — for cars first held before 1 April 2025 — a plug-in hybrid, and its value at first retail sale must be at or below the LCT fuel-efficient threshold for that year.

In dollar terms the exemption matters because, before it existed, a typical A$60,000 EV provided through a novated lease would have attracted around A$10,000–A$15,000 of FBT every year, calculated under the statutory formula method on the grossed-up value of the benefit. Removing that FBT line is what makes the lease arithmetic work for an ordinary 30%-bracket salary earner. The same arithmetic does not work for an internal-combustion equivalent, which is why almost every novated lease provider has pivoted their marketing to BEV inventory since late 2022.

PHEV exclusion from 1 April 2025

The 2024 Federal Budget legislated the removal of plug-in hybrid electric vehicles from the FBT exemption, effective 1 April 2025. Two transitional rules apply:

1. A PHEV that was first held and used before 1 April 2025 stays exempt until the end of any pre-existing financially binding commitment for its use (typically the original novated lease term). Optional extensions of that commitment after 1 April 2025 do not preserve the exemption.
2. A PHEV first held on or after 1 April 2025 attracts full FBT at 47% on the Type 2 grossed-up taxable value, calculated under the statutory formula method or the operating cost method as elected by the employer.

In practice this means new PHEV novated leases entered into from 1 April 2025 onwards have stopped making sense as a salary-sacrifice arrangement for almost all employees. The calculator flags any PHEV input as ineligible and prices the lease with the full FBT applied so the dollar gap against a BEV alternative is visible.

The LCT fuel-efficient threshold of A$91,387

The Luxury Car Tax has two thresholds for new vehicle imports: a standard threshold (A$80,567 for FY2026-27) and a higher fuel-efficient threshold (A$91,387 for FY2026-27) for vehicles meeting a 3.5 L per 100 km combined fuel consumption limit. All BEVs and FCEVs satisfy that limit by definition, so the relevant threshold for the EV FBT exemption is the higher A$91,387 figure.

Crucially, the threshold is tested at first retail sale on a GST-inclusive basis. A Tesla Model Y RWD at A$58,000, a BYD Sealion 7 at A$58,990, a Polestar 2 Long Range at A$71,400 and a Kia EV6 Air at A$72,590 all sit comfortably under the threshold. A long-range Polestar 3 starting near A$118,420, a BMW iX xDrive40 from around A$135,400, a Mercedes EQE 300 from around A$135,000 and the Porsche Taycan all sit above. If the EV is over the threshold the FBT exemption does not apply, the lease attracts full FBT, and the salary-sacrifice arrangement almost never delivers a net saving. The calculator flags the breach and prices the FBT in.

Reportable Fringe Benefits Amount and the HECS / Division 293 / CCS cascade

Even when the FBT itself is exempt, the Australian Taxation Office still requires the employer to record the underlying value of the benefit on the employee payment summary as the Reportable Fringe Benefits Amount, calculated as the taxable value × 1.8868 (Type 2 gross-up factor for benefits where the employer cannot claim a GST input tax credit). RFBA only appears on the payment summary when the underlying value exceeds A$2,000 grossed-up.

RFBA is added to the income definitions used for several income-tested obligations and entitlements:

• HECS-HELP / Study and Training Loan Repayment Income (HRI) — RFBA is added to taxable income, reportable employer super contributions, total net investment loss and exempt foreign income to give HRI. A higher HRI lifts the marginal HECS-HELP repayment band.
• Medicare Levy Surcharge income — RFBA is added on top of taxable income to test against the singles / families threshold.
• Division 293 income — RFBA is added to test against the A$250,000 high-income threshold for the extra 15% contributions tax.
• Child Care Subsidy combined family income — RFBA is added to test eligibility and the percentage of subsidy.
• Centrelink family payments — Family Tax Benefit and several other payments use an Adjusted Taxable Income definition that adds RFBA.

Worked RFBA example. Take a A$60,000 BEV packaged on a 5-year lease at 8.5% with A$5,000 of running costs. The annual lease repayment is around A$12,378 and the total annual amount packaged from pre-tax salary is around A$17,378. Multiplying by the Type 2 factor of 1.8868 gives an RFBA of around A$32,788 reported on the payment summary every year. For a A$150,000-salary employee with a A$50,000 HECS-HELP balance, the post-sacrifice taxable income of around A$132,000 plus RFBA of A$32,788 lifts HRI from A$150,000 (band A$142,101–A$150,626 at 9.0%) to A$164,810 (top band A$159,664+ at 10.0%) — a typical extra HECS-HELP repayment of around A$3,000 per year on top of the lease arithmetic.

Worked examples

1. A$50,000 entry-level BEV, 5-year, A$90,000 salary, A$5,000 running, A$0 HECS. The lease repayment lands at around A$10,300 per year and the package draws around A$15,300 of pre-tax salary annually. RFBA is around A$28,900, no FBT, no HECS impact. Monthly take-home falls from around A$5,451 to A$4,990, a A$461 reduction for around A$1,275 of EV running cost converted from after-tax to pre-tax — typical net saving of about A$8,000 over the term, before residual buy-out.

2. A$80,000 mid-spec EV (Kia EV6 Air), 5-year, A$130,000 salary, A$5,500 running, A$0 HECS. Lease repayment around A$16,500 per year, pre-tax package around A$22,000, RFBA around A$41,500. No FBT, no HECS impact at this income level. Monthly take-home falls from around A$7,676 to A$6,887, with the typical net cost over the 5-year term around A$10,000 lower than buying for cash, before residual.

3. A$91,000 EV just under the LCT threshold (Polestar 2 long-range or similar), 4-year, A$120,000 salary, A$6,000 running, A$0 HECS. The vehicle sits A$387 under the A$91,387 threshold, so the exemption applies. Lease repayment around A$20,350 per year, pre-tax package around A$26,350, RFBA around A$49,700. Monthly take-home falls from A$7,068 to A$6,075, with the typical net cost over the 4-year term around A$9,400 lower than buying for cash. The same vehicle priced A$1,000 higher would breach the threshold.

4. A$95,000 luxury EV that breaches the LCT (BMW iX xDrive40 or similar). Same A$150,000 salary, 5-year, A$5,000 running. Because the FBT exemption is lost, full FBT at 47% on the grossed-up taxable value applies — around A$21,800 per year. The lease packaging plus FBT recovery roughly halves take-home for a vehicle that costs only A$5,000 more than the eligible Polestar 2 above. The typical net cost over the 5-year term lands around A$60,000 higher than the cash purchase, which is why luxury EVs almost never make sense via novated lease.

5. A$60,000 BEV with a A$40,000 HECS balance on A$120,000 salary. Eligible for the exemption, lease repayment around A$12,400 per year, RFBA around A$32,800. RFBA pushes HRI from around A$120,000 (band 7.0%) to around A$140,800 (band 8.5%), a typical extra HECS-HELP repayment of around A$3,000 per year. Net saving versus cash drops from around A$9,000 to roughly A$6,000 over a 5-year term — still positive, but materially smaller than the headline FBT exemption suggests.

Common pitfalls

• The residual is yours to find. At end of term the employee owes the residual (28.13% of the original price for a 5-year lease, A$16,878 on a A$60,000 vehicle) from after-tax dollars. If the second-hand market value falls below that figure — a real risk for EVs as new model launches and battery price declines compress used-EV pricing — the shortfall is the employee's. Many novated lease quotes hide this risk by stopping the cash flow at the end of the lease term.
• Refinancing the residual restarts the FBT exemption clock at the second-hand price, not the original price. A second-hand EV that has dropped below the LCT fuel-efficient threshold remains exempt; one that was always above remains non-exempt.
• PHEV trade-ins and rollovers no longer preserve the exemption. A pre-1 April 2025 PHEV lease that ends after 1 April 2025 can only be rolled into a new BEV lease, not extended as a PHEV, if the exemption is to continue.
• Salary sacrifice does not reduce the Super Guarantee base for the lease component. Since 1 January 2020, employers must pay Super Guarantee on the pre-sacrifice ordinary time earnings, so sacrificing into a novated lease does not lower the employer's Super Guarantee obligation.
• 2027 mid-term review. The Electric Car Discount Act 2022 included a statutory three-year review scheduled for mid-2027. The review will look at EV uptake, the cost of the FBT exemption to revenue and the case for ending or extending the concession for battery electric vehicles. Subject to change at the 2027 mid-term review of the Treasury Laws Amendment (Electric Car Discount) Act 2022.

This calculator is intended for general guidance only. Confirm your specific FBT, RFBA and HECS impacts with a registered tax agent before signing a novated lease agreement.

Related calculators

• Salary sacrifice super calculator — pair with this calculator if you are also salary-sacrificing into super, since both arrangements together can quickly hit the A$30,000 concessional cap and the A$250,000 Division 293 trigger in the same year.
• HECS-HELP repayment calculator — full HRI model including reportable employer super and net investment loss; useful to size the HECS-HELP impact of the RFBA cascade above.
• Division 293 extra super tax calculator — RFBA is one of the inputs that lifts Division 293 income above the A$250,000 threshold; check whether the lease tips Division 293 in your year.
• Medicare Levy Surcharge calculator — RFBA is added to MLS income, so a high RFBA from a novated lease can push a borderline taxpayer over the singles or families threshold without changing their salary.
• Negative gearing calculator — useful as a complement when an investor is comparing two pre-tax wealth strategies (geared property vs salary-sacrificed EV) competing for the same income headroom.

Source: ATO — Electric cars exemption · ATO — Luxury Car Tax thresholds · ATO — Reportable Fringe Benefits · ATO — Key rates and thresholds for FBT · ATO — Tax rates for Australian residents · ATO — HELP / Study and Training Loan thresholds · Treasury — Electric Car Discount Act 2022 explanatory material.