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.
An honest note: FBT exempt means no fringe benefits tax is payable, but the benefit is still reported on your income statement. That reported amount can affect income-tested things like HECS or HELP repayments, the Medicare levy surcharge, and family payments. Our calculator and team will always show you the full picture.
Common questions
How does a novated lease save tax?
Three ways. Part of the lease is paid from pre-tax salary, which lowers your income tax. You save the GST on the car and its running costs. And an eligible electric car carries no fringe benefits tax at all.
How much can I save?
It depends on your salary, the car and how much you drive. The pre-tax saving is bigger the higher your marginal tax rate, and an EV saves the most because there is no FBT. The calculator gives you your real figure in a minute.
Is the saving really tax-free?
The savings are real, but there is an honest detail: the benefit is reported on your income statement. That reported amount can affect income-tested things like HECS or HELP repayments and family payments. We show you that up front rather than burying it.
What is the GST saving?
You do not pay GST on the car purchase price, up to a claimable cap, and your running costs are packaged GST-effective. On a fifty thousand dollar car that alone is thousands of dollars.