Salary Sacrifice Cars - Your Complete Guide in Australia
How does salary sacrifice work for cars?
Looking to save on your next vehicle?
Salary sacrifice cars offer a tax-effective way to drive your dream car in Australia. Also known as novated leasing, this arrangement lets you pay for a car and its running costs using your pre-tax salary, reducing your taxable income and boosting your savings.
In this ultimate guide, we’ll explore how salary sacrifice cars work, their benefits, and why they’re a smart choice in 2025. Plus, use our calculator to see how much you could save today!
What Are Salary Sacrifice Cars?
A salary sacrifice car is a vehicle leased through a novated lease agreement, where you pay for it with your pre-tax salary. It’s a tax-effective way to drive a new car while covering running costs like fuel and insurance.
Comparing Salary Sacrifice Cars to Other Options
| Factor | Novated Lease (Salary Sacrifice) | Car Loan | Outright Purchase |
|---|---|---|---|
| Payment Method | Pre-tax salary, reducing taxable income | Post-tax income | Full payment upfront post tax |
| Tax Benefits | Yes – lowers taxable income, includes GST savings | No | No |
| Running Costs | Often bundled (fuel, insurance, maintenance) | Separate (Post tax) | Separate (Post tax) |
| Ownership | Leased; option to buy | Owned after loan paid | Owned immediately |
| Upfront Cost | No deposit needed | Deposit required | High (full car price) |
| Flexibility | Tied to employment; less flexible | More flexible repayment terms | Most flexible – no repayments |
| Best For | Employees wanting tax savings | Those needing ownership flexibility | Those with cash to spend upfront |
What Cars Can I Salary Sacrifice?
You can choose almost any new or used car, from a budget-friendly Hyundai Venue to a premium BMW X3. EVs under $84,916 qualify for extra tax breaks in 2025.
Whether you drive a 4x4 or an electric vehicles you could save by paying for your costs pre-tax.
What’s New for Salary Sacrifice Cars in 2025?
The landscape of salary sacrifice cars in Australia is evolving. Here’s what’s fresh for 2025:
Tax Updates: The Australian Taxation Office (ATO) continues to support novated leases, with no major policy shifts announced as of March 19, 2025. Check the latest ATO guidelines to confirm your eligibility.
Electric Vehicle (EV) Incentives: Thanks to the Fringe Benefits Tax (FBT) exemption for EVs under $84,916 (as of 2025), salary sacrificing a Tesla Model Y or Hyundai Ioniq 5 could save you thousands. EVs are increasingly popular for their low running costs and environmental benefits.
New Models: Popular 2025 salary sacrifice cars include the Toyota Corolla Cross (hybrid), Kia EV6, and Mazda CX-5 – all offering great value under a novated lease.
Pro Tip: With fuel prices climbing, EVs and hybrids are smart picks for maximizing your salary sacrifice benefits in 2025. Contact Easifleet to explore your options!
Is Salary Sacrificing a Car Worth It?
For many,the simple answer is yes! It depends on your tax bracket, travel habits and car choice. Higher travelers often see big savings as due those on higher tax rates. Calculate your benefits to find out.
What benefits can I salary sacrifice?
Extend the benefits of salary packaging to cover essential living costs such as rent, insurance, and school fees, helping you pay even less tax.
Enhance your retirement planning by making pre-tax contributions to your superannuation fund. This will help grow your retirement savings faster and reduce your current taxable income.
Drive your dream car while enjoying the financial benefit of paying with pre-tax dollars. This arrangement not only reduces your taxable income but also simplifies car ownership.
Keep up-to-date with the latest technologies, which classify as exempt benefits for your employer who wont have to pay FBT on them. Buy a new laptop, smartphone, and more using pre-tax dollars from your salary. You could save significantly and stay ahead in the tech game!
How it works?
A novated lease is a convenient and cost-effective agreement between you, your employer, and a novated leasing provider, like Easi. You choose a car you love and pay for it directly from your wages through salary sacrificing. This employee benefit is very popular as your employers only involvement is paying across your money for your lease into your easi account.
The car you want for less
Novated Leasing - also known as salary sacrificing or salary packaging - a car is where you bundle together the finance and running costs of your car into one easy package which comes out of your salary each pay. The benefit to doing this is you save income tax on the running costs of your car which you will have to pay anyway. You also don’t pay tax on the purchase price of the car, saving you more money in the long-term.
A novated lease often saves more due to tax advantages and bundled costs, unlike a car loan paid with post-tax income, though it requires employer involvement. Request a comparison from your leasing specialist to see which works for you.
Yes, you need to be an employee paying income tax to unlock the benefits of novated leasing. If you work for any not-for-profit organizations, you can also be eligible.
You can take out a novated lease for a minimum of 12 months and maximum of 60 months.
Yes, you can take out as many as you can afford and save tax with a salary sacrifice on each car in your household.
Get the wheels in motion
Ready to jump in the seat of your new car? Let’s get this show on the road!