Novated lease quotes are dense with figures that look similar but mean different things — gross vs net, pre-tax vs post-tax, ECM contributions, residual values, comparison rates. Most people sign having understood roughly half of it. This guide walks through a real quote structure line by line, explains what each figure actually means, shows you the maths behind it, and gives you a checklist to verify the numbers before you commit.
Provider quotes vary in format — SG Fleet, Fleetpartners, and Maxxia all lay them out differently — but the underlying figures are always the same. Here's a representative example we'll refer to throughout this guide. All figures are for a $55,000 drive-away vehicle, $120,000 salary, VIC, 3-year lease, 15,000 km/year.
Now let's go through every section in detail.
The drive-away price is what you actually pay at the dealership — it includes stamp duty, registration, CTP, and any dealer delivery charges. The base price is the vehicle's price before these on-costs.
This distinction matters because the ATO's rules for novated leases are defined in terms of the base vehicle price, not the drive-away price. The residual value, FBT calculation, and EV exemption threshold all use the base price. A good quote will show both figures clearly.
The annual interest rate applied to the financed amount (drive-away price) over the lease term, with the residual as a balloon payment at the end. Rates typically run 5.5–8% p.a. depending on market conditions and your provider.
Unlike a personal loan, the finance rate on a novated lease is not advertised as a comparison rate — providers are not required to disclose the comparison rate for leases under the National Consumer Credit Protection Act. This makes it harder to compare directly. The way to compare is to look at the total cost including all fees, not just the headline rate.
This is the core of the arrangement. Every dollar in this section is deducted from your gross salary before income tax is calculated — which is why it produces a tax saving.
The monthly payment on the lease itself — equivalent to the repayment on a loan with a balloon payment (the residual) at the end. This is calculated using standard loan mathematics.
You can verify this figure exactly using the Veercal novated calculator or any standard loan calculator — enter the drive-away price as the loan amount, the ATO residual as the balloon, and the quoted rate.
One of the key advantages of novated leasing is that these costs are included in the salary sacrifice — meaning you pay for fuel, insurance, registration, and servicing with pre-tax dollars. This produces an additional tax saving on top of the finance component.
These are budget estimates, not actual costs. The provider estimates annual fuel based on your stated kilometres and average fuel price, divides by 12, and includes it in the monthly sacrifice. If your actual costs are lower, the difference typically accumulates in a "running cost budget" account and is returned to you at the end. If costs exceed the budget, you may need to top up.
Providers sometimes use conservative (high) running cost estimates to make the income tax saving look larger. A higher sacrifice means a bigger tax saving in dollar terms — but you're sacrificing more than you'll spend, and the excess sits with the provider until year end. Check that fuel costs are based on realistic local prices and your actual expected usage.
The annual fee charged by the novated lease provider for administering the arrangement — processing payments, managing the running cost budget, FBT reporting, and year-end reconciliation. Typically $800–$1,500 per year, included in the salary sacrifice so it's effectively pre-tax.
This fee varies between providers and is worth comparing. A difference of $300/year in management fees over a 3-year lease is $900 — worth negotiating, particularly on higher-value vehicles where providers have more margin.
This is the most misunderstood figure in a novated lease quote. The ECM (Employee Contribution Method) is a separate, additional amount deducted from your take-home pay after income tax. It is not part of the salary sacrifice — it comes out of your net pay.
Its purpose is to eliminate the Fringe Benefits Tax (FBT) that would otherwise be payable on the lease. Under the statutory method, your employer's FBT obligation is:
By making a post-tax employee contribution equal to the statutory amount (base price × 20%), you reduce the taxable value of the benefit to zero — so the employer pays $0 FBT and the cost passes back to you via this deduction.
The ECM contribution amount (base price × 20%) and the grossed-up FBT amount (base × 20% × 2.0802 × 47%) are close but not identical — because 2.0802 × 0.47 = 0.978, not 1.0. In practice both are used — the quote above uses the grossed-up FBT figure ($860/mo). Veercal uses the grossed-up FBT method to match most provider quotes.
Battery electric vehicles (BEVs) under the fuel-efficient LCT threshold ($91,387 in FY2025–26) are completely FBT-exempt. No post-tax ECM contribution is required. This makes the tax saving substantially larger — every dollar of sacrifice is effective pre-tax with nothing taken back post-tax. It's the single biggest difference between leasing an EV vs a petrol vehicle.
The reduction in your income tax liability each month as a result of the salary sacrifice reducing your taxable income. This is the core financial benefit of a novated lease.
Some providers calculate the tax saving as simply: monthly sacrifice × marginal tax rate. At a $120k salary the marginal rate is 37% — so $1,641 × 37% = $607/mo. But this overstates the saving when the sacrifice crosses tax bracket boundaries. The correct bracket method gives $541/mo — a meaningful $66/mo difference. Veercal uses the correct bracket method. If a provider's quote shows a suspiciously round figure or a figure that's exactly sacrifice × marginal rate, verify it.
What you actually pay each month, net of all moving parts. Calculated as:
This is the figure you should compare against a personal loan or dealer finance repayment — it's your actual monthly cash outflow. It includes running costs, so it's not directly comparable to a pure finance payment — you'd need to add estimated running costs to any alternative.
Most providers package running costs into the salary sacrifice — fuel, rego, insurance, servicing, tyres, and their management fee. This is genuinely advantageous: you pay for these with pre-tax dollars. But there are some details worth understanding.
Each month, the running cost portion of your sacrifice is set aside in a budget account. As you incur costs (fill up fuel, pay for a service), you submit receipts or use a provider-supplied fuel card. The actual spend is drawn from the budget. At year end:
Some providers issue branded fuel cards and require you to use specific fuel networks. Others are more flexible. If you drive a lot through areas with limited coverage, check whether the card works at your usual stations. This is a minor operational point but worth knowing before you're locked in.
The lump sum owing at the end of the lease — the amount you must pay to own the car, or that must be covered by the proceeds of a trade-in or private sale. The ATO sets statutory minimum residual percentages based on lease term and annual kilometres driven.
| Annual km | 2-year | 3-year | 4-year | 5-year |
|---|---|---|---|---|
| Up to 15,000 | 65.63% | 52.88% | 43.75% | 37.50% |
| 15,001–25,000 | 56.25% | 46.88% | 37.50% | 28.13% |
| 25,001–35,000 | 50.00% | 40.63% | 31.25% | 21.88% |
| 35,001–45,000 | 43.75% | 34.38% | 25.00% | 15.63% |
| Over 45,000 | 37.50% | 28.13% | 18.75% | 9.38% |
These are minimums — providers can set a higher residual (which lowers your monthly payment) or a lower one (which raises monthly payments but reduces the balloon). The residual is always a percentage of the base vehicle price, not the drive-away price.
The ATO residual has nothing to do with what the car will actually be worth at lease end. Some vehicles hold value well and are worth more than the residual — you have equity to work with. Others depreciate faster than the ATO schedule — you end up underwater. Check Redbook estimated values for your vehicle at the lease end date before signing. Our end of finance guide covers all your options in detail.
The total cost figure in a quote is the most important number — and the most commonly presented in a misleading way. Here's what it should include, and how to verify it.
The correct total cost formula is:
Some quotes present the "cost" as simply the sum of monthly out-of-pocket payments over the term — without adding the residual. A quote might show "$1,980 × 36 = $71,280 total cost" and omit the $27,911 residual that's also due at the end. This makes the deal look dramatically cheaper than it is. Always confirm whether the residual is included in any "total cost" figure.
Use this before signing any novated lease agreement.