Is an EV novated lease worth it in 2025-26?
For electric cars, the answer is "often, yes" — thanks to a tax exemption that doesn't apply to petrol or diesel. But two things can quietly change the maths.
Novated leasing has been around for decades, but electric vehicles changed the conversation. A tax exemption introduced for EVs turned a modest salary-packaging perk into one of the better deals going — provided the car qualifies and you understand what happens at the end.
The exemption that does the heavy lifting
Eligible electric and hydrogen vehicles priced below the fuel-efficient luxury-car threshold — $91,387 for 2025-26 — are exempt from Fringe Benefits Tax. In plain terms: with no FBT to neutralise, the entire lease (finance plus running costs) comes out of your pre-tax salary, and you skip the post-tax "employee contribution" that petrol and diesel cars require. That's the difference between a good deal and a great one.
Why petrol and diesel save less
A non-exempt car still gets some benefit — you avoid GST on the purchase and running costs, and part of the lease is pre-tax — but to cancel the FBT, you contribute roughly 20% of the car's value each year from after-tax dollars. That employee contribution eats much of the advantage, which is why the same lease on a combustion car saves far less than on an EV. New plug-in hybrids lost their exemption from 1 April 2025, so they're now treated like petrol cars.
The residual you can't ignore
At the end of the lease you owe a residual — a set percentage of the car's value (28.13% for a five-year term), paid from after-tax dollars with GST on top. Any honest comparison has to include it. The risk worth naming: if used-EV values have fallen below your residual — entirely possible as prices drop — you wear the shortfall.
The other catch: your job
A novated lease is tied to salary packaging through your employer. If you change jobs, the lease "novates" to a new employer who offers packaging — or reverts to you to pay directly, without the pre-tax benefit, until then. If your work feels uncertain, weigh that risk.
Run the comparison
See a novated lease against a car loan and paying cash, in real after-tax dollars — with the EV exemption and residual built in.
If the car is for your business rather than personal use, the tax works differently again — depreciation, GST credits and the instant asset write-off come into play — so that's a separate comparison. Either way, novated-lease maths is intricate and quotes vary between providers, so get a formal quote, confirm the rules at the ATO, and check with a tax adviser before signing.