In 2025, novated leasing has become one of the smartest and most cost-effective ways for Australians to get behind the wheel of a new car. With recent legislative changes—particularly the Fringe Benefits Tax (FBT) exemption for electric vehicles (EVs)—this salary packaging option now offers even greater tax savings and convenience for employees across all industries.
What Is a Novated Lease?
A novated lease is a three-way agreement between you, your employer, and a leasing provider. It allows you to salary package your car and all its running costs—including fuel, servicing, insurance, tyres, registration, and finance—so that payments are made from your pre-tax income. This reduces your taxable income, which in turn increases your take-home pay.
It’s essentially like getting a pay rise and a new car in one move.
Why the FBT Exemption Matters
Introduced under the Electric Car Discount Bill, the FBT exemption applies to electric vehicles. This means employees can salary package these low-emission vehicles without incurring fringe benefits tax—a tax usually charged at a whopping 47%.
This exemption has made novated leasing even more attractive, particularly for EVs, by significantly reducing the total cost of ownership.
Take the Peugeot 308 vs. Peugeot e-308 as an example:
- Petrol model: $43,990 RRP with $489 fortnightly out-of-pocket cost.
- Electric model: $61,490 RRP with only $423 fortnightly out-of-pocket cost thanks to the FBT exemption.
Over a five-year lease, that equates to over $30,000 in savings for the EV—despite its higher upfront price.
Top Selling Novated Lease Vehicles in 2024
According to recent data from the 2025 Novated Leasing Guide and NALSPA, the top novated lease vehicles reflect Australians’ growing appetite for electrified and fuel-efficient options.
| Rank in 2024 | Model | Powertrain |
|---|---|---|
| 1 | Tesla Model Y | Electric |
| 2 | Tesla Model 3 | Electric |
| 3 | Mitsubishi Outlander | Plug-in Hybrid |
| 4 | Ford Ranger | Diesel |
| 5 | Toyota RAV4 | Hybrid |
| 6 | BYD Seal | Electric |
| 7 | Ford Everest | Diesel |
| 8 | BYD Sealion 6 | Plug-in Hybrid |
| 9 | Toyota Landcruiser Prado | Diesel |
| 10 | Mazda CX-5 | Petrol |
This mix of EVs, PHEVs, hybrids, and traditional powertrains highlights how novated leasing supports diverse driving needs—from low-emission city driving to long-distance towing and off-road adventures.
How Much Can You Save?
Novated leasing offers clear financial benefits:
- No GST on vehicle purchase and running costs.
- Lower income tax thanks to salary deductions.
- Simplified budgeting with one monthly payment that includes all expenses.
- No large upfront payment—making it easier to upgrade to a better vehicle.
- Potential FBT exemption on EVs and PHEVs.
Depending on your income, location, and vehicle choice, savings can reach $10,000 to $30,000 over the life of a lease. For example, a Mitsubishi Triton GSR diesel 4X4 novated lease saves around $12,768 after tax over five years.
Why Novated Leasing Is a Smart Employee Benefit
Novated leasing isn’t just a way to save money—it’s also a great employee benefit that helps businesses attract and retain talent. Any Australian employee can access it, and the setup process is straightforward, even for small businesses.
With novated leasing, you can:
- Drive the car you want—whether it’s electric, hybrid, or diesel.
- Choose to lease new or eligible used vehicles.
- Upgrade every few years with flexible lease terms (usually 3–5 years).
- Include accessories like tow bars, roof racks, or even custom number plates.
