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Novated lease on a used car

A used car can be put on a novated lease if the lessor accepts it; each lessor sets its own age and kilometre limits, which we have not verified (check with your lessor). Tax works the same way as for a new car: the 20% FBT statutory formula applies unless the car meets the EV exemption, and an ATO minimum residual applies at the end. Source: ATO.

Key facts

Figure	Value	Source
Car statutory formula rate	20% of base value a year	ATO, checked 17 Oct 2026
Base value reduction	One-third, from the FBT year after the 4th anniversary	ATO, checked 17 Oct 2026
Minimum residual, 3-year lease	46.88% of cost	ATO, checked 17 Oct 2026

For buyers considering a second-hand car; age and kilometre limits are set by each lessor; check with yours.

The calculator below is preset for a $25,000 petrol car. For an overview, read how a novated lease works.

You Annual taxable salary ($) Before salary packaging. Australian resident rates for 2026-27.

The car Car drive-away price ($) Registration and stamp duty ($) The part of the drive-away price that is registration and stamp duty. It is excluded from the FBT base value. Car type Car first held and used on or after 1 Jul 2022 I confirm luxury car tax has never been payable on this car The EV exemption depends on this, not on the price. Check with the dealer if unsure. PHEV: financial commitment made before 1 Apr 2025

The lease Lease term (years) Lease start date Defaults to 1 April, the start of the FBT year. Any other date pro-rates FBT by days available ÷ days in the FBT year (365, or 366 in a leap year). ATO Residual (%) Defaults to the ATO minimum residual value for the term. Change it to use your lessor's figure. Interest rate (% p.a.) Example only, not a quoted rate. Use the rate from your quote. Annual running costs ($) Charging or fuel, registration, insurance, tyres, servicing.

Assumptions Assume employer claims GST credits Off by default. Applies 1/11 to the car price excluding registration and stamp duty, and to GST-bearing running costs only. The car credit is capped at $6,353, 1/11 of the 2026-27 car limit of $69,883 (ATO). GST-bearing running costs ($ a year) The part of your running costs that includes GST (for example charging, tyres, servicing). Only used when the GST assumption is ticked. FBT rules

Sources: ATO tax rates · ATO FBT rates · ATO EV exemption · ATO luxury car tax · Announced changes · Every step: methodology

What to check with the lessor before you choose a used car

Age and kilometre limits, at the start and at the end of the term: ask your lessor.
Whether they buy from private sellers or only from dealers: ask your lessor.
The residual they will use. The ATO minimum residual values (1 yr 65.63%, 2 yr 56.25%, 3 yr 46.88%, 4 yr 37.5%, 5 yr 28.13%) are for cars with an 8-year effective life (ATO). How a lessor applies them to an older car is not verified; ask your lessor.
The interest rate and fees. Rates on used cars may differ, so test the quote with the quote checker.

How does FBT work on a used car?

The same statutory formula: taxable value = base value × 20% × days available ÷ days in the year, less employee contributions. The base value starts from the cost price excluding registration and stamp duty, plus accessories, dealer delivery, GST and LCT (ATO). For a used car we enter the price paid. The one-third reduction applies from the FBT year after the 4th anniversary of when the car was first held. The calculator assumes the car is first held when the lease starts and applies the reduction from the first FBT year starting later than the 4th anniversary of that date. Whether a used car's earlier holding by someone else counts is not verified; if it does, the reduction could start sooner than the calculator shows. More detail is on FBT on a novated lease.

Worked example

$25,000 used petrol car, $100,000 salary, 3 years, example 8% rate, $4,000 running costs a year:

FBT taxable value $5,000 a year, covered by post-tax contributions of $5,000.
Pre-tax deductions $4,931; tax saved $1,578 a year.
Net cost $8,353 a year ($321 a fortnight), plus a $11,720 residual.
Over the term vs paying cash: $220 less, before lessor fees and interest you could earn on cash.

For a cheaper petrol car the tax saving is modest, because the post-tax contribution is a large share of the package. Compare with buying outright.

Can a used EV be FBT exempt?

The ATO test is that the car is zero or low emission, first held and used on or after 1 July 2022 and LCT was never payable (ATO). How "first held and used" applies to a second-hand EV is not verified; check the ATO page. In the calculator, tick or untick "first held and used on or after 1 Jul 2022" once you know. See EV FBT exemption.

Frequently asked questions

Can you get a novated lease on a used car?

It depends on the lessor. The lessor decides whether a particular car qualifies and sets any age or kilometre limit. We have not verified those limits; check with your lessor.

Is a used electric car FBT exempt?

The ATO conditions are a zero or low emission car first held and used on or after 1 July 2022 where LCT was never payable. How the first-held date applies to a second-hand car is not in our verified sources; check the ATO page.

What is the FBT base value of a used car?

The ATO base value starts from the cost price (excluding registration and stamp duty) plus accessories, dealer delivery, GST and LCT. For a used car we use the price you pay; confirm with your employer.

By Abdisalan Awale, editor. Published by Abdisalan Awale, ABN 64 886 470 398 (about us). Last reviewed 17 Oct 2026 against the sources on our sources page. Not yet reviewed by a qualified third party. How we calculate: methodology.