The plain-English guide
Novated lease tax savings, explained
A novated lease saves you tax in three specific ways. None of it is a trick, and we will always show you the full picture, including the parts other providers leave out. Here is where each saving comes from.
Saving one: pre-tax salary
Part of your lease is paid before income tax. That lowers your taxable income, so you pay less tax, and the higher your tax bracket the more it is worth. It is the core of how salary packaging a car works.
Saving two: GST
You do not pay GST on the purchase price of the car, up to the claimable cap, and your fuel or charging, servicing, tyres and insurance are packaged so the GST comes off those too. On a mid-price car this is often several thousand dollars.
Saving three: no FBT on an EV
An eligible electric car is exempt from fringe benefits tax, the single biggest saving in novated leasing. It is why an EV almost always beats a petrol car on the numbers. See the EV exemption for the detail.