Novated Lease Salary Sacrifice and the National Full-Time Average
A novated lease salary sacrifice is a popular way for Australian employees to finance a car while reducing their taxable income. Under this arrangement, your employer enters a lease agreement for a vehicle, and the lease payments—along with running costs—are deducted from your pre-tax salary. This lowers your gross taxable income, meaning you pay less income tax. However, the arrangement is subject to fringe benefits tax (FBT) rules set by the ATO.
How It Works
You choose a car and a lease term (typically 1 to 5 years). Your employer pays the lease and running costs from your salary before tax. The amount sacrificed is not included in your gross salary for most reporting purposes, including the ABS Average Weekly Earnings. The national full-time adult ordinary-time average is $2083.70 per week, or about $108,352 per year (ABS Average Weekly Earnings, May 2026, × 52). This is the figure used on Place a salary on the line to compare any salary.
Tax Implications
Salary sacrifice reduces your taxable income. For the 2026–27 financial year, the ATO tax rates are: nil up to $18,200; 15% from $18,201 to $45,000; 30% from $45,001 to $135,000; 37% from $135,001 to $190,000; and 45% above $190,000. The Medicare levy of 2% applies before any reductions. By lowering your taxable income, you may move into a lower tax bracket, saving money. However, FBT may apply if the car is used for personal purposes. Many novated leases are structured to minimise FBT by using the statutory formula method.
Comparison to the Full-Time Average
Your gross salary before sacrifice is what is compared to the national full-time average. For example, if your gross salary is $120,000 and you sacrifice $15,000 for a novated lease, your taxable income becomes $105,000, but the $120,000 is the figure used for comparison. The full-time average of $108,352 is a benchmark. If your gross salary is above that, you are above the average; if below, you are below. The median full-time salary is about $90,532 (ABS Employee earnings, August 2025), and the all-employees median is about $74,100. The national minimum wage from 1 July 2026 is $26.44 per hour, $1004.90 per week, or about $52,255 per year on a 38-hour week.
State Averages
State full-time averages vary. For instance, New South Wales is about $109,658, Victoria $106,137, Queensland $106,064, South Australia $102,450, Western Australia $115,825, Tasmania $96,008, Northern Territory $103,173, and the Australian Capital Territory $119,090. These figures come from the same ABS survey and are useful for regional comparisons. See States and territories for more detail.
Key Considerations
- A novated lease salary sacrifice does not change your gross salary for the purpose of the index. The index uses ordinary-time earnings before any sacrifice.
- The arrangement can be beneficial if you are in a higher tax bracket and need a car, but you should consider FBT, residual value, and employer policies.
- The ATO provides a car calculator for FBT, but this site does not offer that tool. For more on how the figures are set, see How the figures are set.
Conclusion
While a novated lease salary sacrifice can reduce your tax bill, it does not alter your position relative to the national full-time average. Your gross salary remains the benchmark. If you are considering such an arrangement, compare your gross salary to the average of $108,352 to see where you stand. The index does not publish a specific figure for this arrangement, but the concept is well understood within the framework of Australian salary and tax law.