Disclaimer: General estimate only; novated lease quotes, GST treatment, FBT eligibility, fees, running costs and employer packaging rules vary.
Enter your salary, vehicle price, finance rate and running costs to estimate the take-home pay impact of salary packaging a car. This Car Salary Sacrifice Calculator also displays the lease repayment, residual value, pre-tax deduction, post-tax contribution and potential tax saving.
What Is a Car Salary Sacrifice Calculator?
A Car Salary Sacrifice Calculator estimates how a novated lease may affect an Australian employee’s salary and take-home pay. It combines the estimated vehicle finance cost, annual running expenses and administration fees to calculate an annual car package cost.
A novated lease is generally an arrangement involving an employee, employer and lease provider. Payments may be deducted from the employee’s salary using a combination of pre-tax and post-tax contributions, depending on the vehicle and applicable Fringe Benefits Tax treatment.
The calculator is designed for scenario planning. It does not provide a formal novated lease quote, determine finance approval or confirm that a vehicle qualifies for an FBT exemption.
Before comparing a car package with your earnings, use the Simple Salary Calculator to review your current salary. The Australian Mortgage Calculator may also help if a mortgage is another major commitment competing for your take-home income.
How to Use the Car Salary Sacrifice Calculator
Step 1: Enter your annual salary
Enter your annual salary before packaging. The visible placeholder is A$92,750.
This figure is used to estimate tax before and after the calculated pre-tax car deduction. The car package cost must be lower than the entered annual salary.
The Income Calculator Australia can help you review income separately before entering a salary figure.
Step 2: Enter the vehicle drive-away price
Enter the estimated drive-away price of the vehicle. The placeholder uses A$48,790.
The calculator uses this price to calculate the residual value and, for a taxable car, the maximum post-tax contribution applied by its simplified method.
Step 3: Select the novated lease term
Choose a lease term from one to five years. The default selection is 3 years.
Each lease term has a programmed residual percentage:
- 1 year: 65.63%
- 2 years: 56.25%
- 3 years: 46.88%
- 4 years: 37.50%
- 5 years: 28.13%
Step 4: Enter the estimated finance rate
Enter the annual percentage rate expected for the lease. The visible placeholder is 7.35% per annum.
The accepted range is 0% to 30%. This estimate may differ from the rate included in a provider’s formal quote.
Step 5: Enter annual running costs
Enter expected annual vehicle expenses. The placeholder is A$6,480.
These costs may include items such as registration, insurance, servicing, tyres, fuel or eligible charging expenses. Actual inclusions depend on the lease arrangement.
Step 6: Enter administration fees
Add the annual administration fees charged under the proposed arrangement. The placeholder uses A$396.
Step 7: Select the FBT treatment
The default option is Taxable car or non-exempt PHEV. Alternatively, select an eligible FBT-exempt electric car.
For the calculator’s 2026–27 EV estimate, an FBT-exempt vehicle price cannot exceed its programmed fuel-efficient vehicle Luxury Car Tax threshold of A$91,661.
Step 8: Select Medicare levy treatment
The default option includes a flat 2% Medicare levy estimate. You can exclude it when comparing a scenario without this simplified charge.
Step 9: Press Calculate
The calculator displays the estimated annual take-home reduction and monthly net cost, together with a complete breakdown of the lease, residual and salary deductions.
The Salary Budget Calculator can help compare the estimated monthly cost with regular household expenses.
How Is a Car Salary Sacrifice Estimate Calculated?
The calculator first calculates the residual value:
Residual value = Vehicle price × Residual percentage
It then uses the vehicle price, residual value, finance rate and selected term to estimate monthly lease repayments. The monthly figure is multiplied by 12:
Annual lease repayment = Monthly lease repayment × 12
The estimated annual package cost is:
Package cost = Annual lease repayment + Running costs + Administration fees
For the default taxable-car option, the calculator applies a post-tax contribution equal to the lower of:
- The complete annual package cost; or
- 20% of the entered vehicle price.
The remaining package cost becomes the estimated pre-tax deduction:
Pre-tax deduction = Package cost − Post-tax contribution
The pre-tax amount reduces the salary used in the calculator’s income-tax comparison. The estimated annual tax saving is the difference between tax before packaging and tax after the pre-tax deduction.
The Payroll Calculator Australia serves a different purpose by estimating payroll amounts rather than the finance and operating costs of a novated vehicle.
Car Salary Sacrifice Calculation Example
This example uses every visible placeholder and all default selections:
- Annual salary: A$92,750
- Vehicle drive-away price: A$48,790
- Lease term: 3 years
- Finance rate: 7.35%
- Annual running costs: A$6,480
- Annual administration fees: A$396
- FBT treatment: Taxable car or non-exempt PHEV
- Medicare levy: Include flat 2% estimate
For a three-year term, the programmed residual rate is 46.88%:
A$48,790 × 46.88% = A$22,872.75
Using the calculator’s finance formula, the estimated annual lease repayment is:
A$11,333.99
The complete annual package cost is:
A$11,333.99 + A$6,480 + A$396 = A$18,209.99
For the taxable-car selection, 20% of the vehicle price is:
A$48,790 × 20% = A$9,758
Because this amount is lower than the package cost, the calculator uses A$9,758.00 as the annual post-tax contribution.
The pre-tax deduction is:
A$18,209.99 − A$9,758.00 = A$8,451.99
The salary used for the after-packaging tax estimate becomes:
A$92,750 − A$8,451.99 = A$84,298.01
The calculator produces these results:
- Annual lease repayment: A$11,333.99
- Estimated residual value: A$22,872.75
- Annual pre-tax deduction: A$8,451.99
- Annual post-tax contribution: A$9,758.00
- Estimated annual tax saving: A$2,704.64
- Estimated annual take-home reduction: A$15,505.35
- Estimated monthly net cost: A$1,292.11
These results exactly match the calculator code for the placeholder inputs and default options.
A contractor may not have access to the same employer-arranged structure. The Contractor Pay Calculator Australia can help compare contractor earnings before considering vehicle-finance options.
Pre-Tax Deduction vs Post-Tax Contribution
A pre-tax deduction reduces the salary used in the calculator’s income-tax estimate. This may create a tax saving because tax is calculated on a lower amount.
A post-tax contribution is taken after tax and does not reduce taxable salary. For the calculator’s taxable-car scenario, it is used as part of the simplified Employee Contribution Method assumption.
The estimated take-home reduction is effectively the package cost minus the calculated tax saving:
A$18,209.99 − A$2,704.64 = A$15,505.35
The Salary Tax Planning Calculator can help compare broader tax scenarios, while the Salary Sacrifice Calculator estimates general salary sacrifice rather than a car-specific lease.
Taxable Cars vs Eligible FBT-Exempt Electric Cars
The taxable-car option divides the package into estimated pre-tax and post-tax amounts. The eligible electric-car option treats the complete calculated package cost as pre-tax and sets the post-tax contribution to zero.
Selecting the EV option does not establish eligibility. Vehicle type, first-use date, value and current legislation may affect the exemption. Review the ATO guidance on salary-sacrificed cars and obtain an employer or provider quote before making a decision.
The calculator also excludes detailed GST treatment, reportable fringe-benefit consequences and provider-specific charges. Any effect on a future tax return should be examined separately with the Tax Return Calculator.
Frequently Asked Questions
Q1: What does the calculator’s annual take-home reduction mean?
A: It estimates how much less take-home income remains after accounting for the package cost and calculated tax saving.
Q2: Does the calculator provide a formal novated lease quote?
A: No. It provides a general estimate based on the entered values and programmed assumptions.
Q3: What costs can I include as annual running costs?
A: Enter relevant estimated expenses such as registration, insurance, servicing, tyres and fuel or eligible charging costs.
Q4: Does a longer lease always cost less?
A: Not necessarily. The repayment and residual change with the term, while finance rates, fees and running costs also affect the result.
Q5: What is the residual value?
A: It is the estimated amount remaining at the end of the lease, calculated from the vehicle price and selected term’s residual percentage.
Q6: Are all electric cars exempt from FBT?
A: No. The vehicle and arrangement must satisfy the applicable eligibility requirements.
Q7: Does the calculator include GST adjustments?
A: No. Detailed GST treatment is excluded and may differ in an actual provider quote.
Q8: Can contractors use a novated lease?
A: A standard novated lease normally requires an participating employer, so contractors should confirm their available arrangements.
Q9: Will the estimate match my provider’s quote?
A: Not necessarily. Actual finance rates, residuals, fees, running-cost budgets, tax treatment and employer rules may differ.