Novated Lease & Car FBT Calculator

How the statutory formula works

The ATO's statutory formula is (A × B × C ÷ D) − E, where A is the car's base value, B is the statutory percentage (a flat 20% since the sliding scale that used to reward higher business kilometres was phased out), C and D are the days available for private use versus days in the FBT year (this calculator assumes the car is available all year, the normal case for a novated lease), and E is any employee contribution. FBT payable is then the taxable value multiplied by the Type 1 gross-up rate (2.0802, used where the employer can claim GST credits on the vehicle, the standard case for novated leases) and the FBT rate (47%).

The Employee Contribution Method (ECM)

ECM means paying part of the car's costs from your after-tax salary rather than pre-tax. That post-tax amount is the "E" in the statutory formula above and directly reduces the taxable value, so contributing an amount equal to the full taxable value brings FBT payable to nil. It's a genuine ATO-recognised mechanism, not an industry workaround, but it trades pre-tax salary-packaging efficiency for after-tax dollars. Whether it's worth doing depends on your marginal tax rate: use the Income Tax Calculator to check yours before deciding how much to contribute.

Electric vehicle FBT exemption

Battery electric and hydrogen fuel cell vehicles are exempt from FBT if their value at first retail sale was below the luxury car tax threshold for fuel-efficient vehicles ($91,387 for 2025-26), and the car was both first held and first used on or after 1 July 2022. The exemption covers salary-packaged and novated arrangements, and extends to running costs like registration, insurance, and home charging. It's still a "reportable fringe benefit" for reporting purposes even though no FBT is actually payable, which can affect income-tested thresholds elsewhere (family assistance payments, the Medicare levy surcharge) even though it costs you nothing directly.

Plug-in hybrids lost eligibility from 1 April 2025, with a narrow grandfathering exception: the vehicle must have been used, or available for use, exempt before that date under a financially binding commitment that can't simply be optionally extended. A new lease, a changed residual value, or an employer change after 1 April 2025 ends the exemption from that point, even on an otherwise-eligible PHEV.

Worked example: $55,000 petrol car vs. an eligible EV

A $55,000 petrol car with no employee contribution: taxable value = $55,000 × 20% = $11,000. FBT payable = $11,000 × 2.0802 × 47% ≈ $10,755 a year. If the employee instead contributes $11,000 a year post-tax (ECM equal to the full taxable value), taxable value drops to $0 and FBT payable is $0, but that $11,000 comes from after-tax pay rather than pre-tax salary packaging.

A $55,000 eligible EV (under the $91,387 threshold, first held and used after 1 July 2022): taxable value is $0 regardless of contribution, so FBT payable is $0 with no employee contribution required at all. That's the entire benefit of the exemption: the full salary-packaging value applies with no ECM trade-off needed.

Operating cost method: the alternative

Instead of the statutory formula, an employer can use the operating cost method: taxable value = (total running costs including deemed depreciation and interest × private-use percentage) − employee contribution. The private-use percentage comes from a 12-week logbook plus odometer records. This can produce a lower taxable value for a car with genuinely high business use, but the record-keeping burden means most novated lease providers default to the statutory formula for simplicity, which is what this calculator uses.

FBT rates for the 2026 FBT year (1 April 2025 – 31 March 2026)

Rates are unchanged from the prior FBT year. LCT thresholds are indexed annually on 1 July; re-check the current figure before relying on it for a vehicle near the cap.