$60,000 EV.
$23,000 saving.
Seriously?

Novated leasing has always required a calculator, a payslip and, ideally, a lie down afterwards.

Electric cars changed the equation.

Under Australia's electric-car FBT exemption, an eligible battery electric vehicle can be provided through salary packaging without the fringe benefits tax that would normally apply to a car benefit.

That matters. A lot.

Because instead of paying for the car and many of its running costs from income you've already paid tax on, an eligible arrangement can move much of that cost into pre-tax salary.

A simple example

Take a new eligible EV costing $60,000. Assume a five-year novated lease, a driver on a salary where the tax benefit is meaningful, and typical packaged running costs.

Compare that with buying the same car privately from after-tax income and paying the same running costs yourself.

Depending on salary, finance rate, kilometres, fees, state charges and the actual package, the difference over five years can run into tens of thousands of dollars.

Around $23,000 in the right example? Yes, it can happen.

But that number is not a universal discount on a $60,000 EV. It is the estimated tax-and-cost difference between two ways of paying for and running the same car, under a particular set of assumptions.

Why EVs get special treatment

Normally, a car provided for an employee's private use can create a taxable fringe benefit. The statutory formula commonly uses 20% of the car's base value before employee contributions.

Eligible electric cars are exempt from FBT under the current rules. That is the big lever.

The exemption is subject to eligibility rules, including the vehicle's first-use date and the luxury car tax threshold rules for fuel-efficient vehicles. Plug-in hybrids generally stopped qualifying for new arrangements from 1 April 2025, subject to transitional rules.

There is still a bill at the end

A novated lease is not free money and it is not free finance.

At the end of a five-year lease there will generally be a residual value if you want to own the car. For a five-year car lease, the ATO minimum residual benchmark commonly used is 28.13% of the original cost.

On $60,000, that's roughly $16,878, before any applicable tax treatment or transaction costs.

You can pay it, refinance it, sell the car and settle it, or potentially move into another arrangement. The exact options depend on the lease.

So is it actually a good deal?

Sometimes, emphatically yes.

Sometimes the tax advantage is quietly eaten by an expensive finance rate, administration fees, inflated insurance, unrealistic running-cost budgets or a poor vehicle price.

That is why the headline saving is not the number WattCar would look at first.

We'd ask: what does the car actually cost you, all-in, over the full term?

Get the lease provider to show you the vehicle price, finance rate or total finance cost, every fee, running-cost assumptions, total pre-tax deductions, any post-tax deductions and the residual. Then compare that with buying the same car another way.

This is a general explainer, not personal tax or financial advice. Novated-lease outcomes vary with individual circumstances and package terms. Check the current ATO rules and your own quote before making a decision.