Understanding Salary Sacrifice and Novated Leases
A salary sacrifice novated lease is an arrangement where your employer deducts car lease payments from your pre-tax salary. This reduces your taxable income, meaning you pay less income tax and Medicare levy. The ATO allows this under certain conditions, and it is a common way to finance a vehicle through work.
When you enter your salary on this site, you are asked for your yearly salary before tax. If you have a novated lease, that figure is the amount after the lease payments have been deducted from your gross pay. So your reported salary will be lower than your total employment cost. This can move your pay below the national full-time average of $108,352 (ABS Average Weekly Earnings, May 2026), even if your total package is above it.
How a Novated Lease Affects Your Reported Salary
The key point is that the site compares pre-tax salaries. The national full-time average is based on gross earnings before any salary sacrifice. If you sacrifice $15,000 a year for a lease, your taxable salary drops by that amount. For example, if your gross salary is $120,000, after sacrifice you report $105,000. That is below the average of $108,352. But your total remuneration (salary plus lease benefit) is $120,000, which is above the average.
This distinction matters when you place a salary on the line. The line shows where your reported salary sits relative to the national average. If you are using salary sacrifice, you may appear lower than you actually are in terms of total compensation.
Comparing Your Salary to the National Average
The national full-time average is $108,352 per year. The full-time median is about $90,532 (ABS Employee earnings, August 2025). The all-employees median is about $74,100. These figures are all before tax and before any salary sacrifice. So if your reported salary after sacrifice is, say, $95,000, you are below the average but above the full-time median. Your position on the line will reflect that.
State averages also vary. For instance, the ACT full-time average is about $119,090, while Tasmania is about $96,008. If you work in the ACT and sacrifice part of your salary, you might still be above the national average but below the ACT average. The site allows you to see where you sit within your state or territory via the States and territories page.
The Role of Tax and the Minimum Wage
Salary sacrifice reduces your taxable income, which can move you into a lower tax bracket. The 2026–27 resident 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. Plus a 2% Medicare levy (with possible reductions). By lowering your taxable income, a novated lease can save you thousands in tax.
The national minimum wage from 1 July 2026 is $26.44 per hour, $1,004.90 per week, or about $52,255 per year on a 38-hour week. If your salary after sacrifice is near this level, you are well below the average. But remember, the minimum wage is a floor; most full-time workers earn more.
Industry and Occupation Considerations
Your industry and occupation also affect where your salary sits. The site provides industry medians and job medians. For example, the median in mining is much higher than in retail. If you work in a high-paying industry and sacrifice a large portion of your salary, you might still be above the national average. Conversely, in lower-paying industries, a sacrifice could push you below.
What Would Move Your Pay Above or Below the Average?
Several factors determine whether your reported salary after a novated lease is above or below the national average:
- The amount you sacrifice: A larger lease payment reduces your reported salary more.
- Your base salary: If your base is high enough, even after sacrifice you may remain above the average.
- Your state or territory: High-average states like the ACT or WA may require a higher base to stay above the line.
- Your industry: Industry medians vary; check the Guides for more on how salary packaging interacts with industry norms.
Ultimately, the site shows your position on the line based on the salary you enter. If you are unsure whether to enter your pre-sacrifice or post-sacrifice salary, use the figure that appears on your payslip as your taxable income. That is the figure the ATO sees and the one that determines your tax. For a true comparison to the national average, you could also calculate your total remuneration (salary plus lease value) and enter that, but the site is designed for the salary you actually receive.
Final Thoughts
A salary sacrifice novated lease is a legitimate way to reduce tax and finance a car. But it can make your reported salary look lower than the national average. Understanding this helps you interpret where you sit on the line. The ABS, Fair Work, and the ATO all treat salary sacrifice differently, so always check the latest rules. For more on how the figures are set, see How the figures are set.