The key concept: Your novated lease has two components — the finance cost (car payments) and a running cost budget. Both come from your pre-tax salary. The running cost budget is where most of the everyday expenses sit, and it resets each year. Any unspent budget is returned to you as cash (post-tax) at year end.
What you CAN expense (pre-tax)
All of the following can be included in your novated lease running cost budget and paid from your pre-tax salary:
✓Registration
- Annual vehicle registration (rego)
- CTP insurance (compulsory third party) — bundled with rego in most states
Rego is one of the clearest-cut inclusions. Your provider pays it from your pre-tax budget when it falls due.
✓Comprehensive insurance
- Annual comprehensive car insurance premiums
- Some providers offer their own fleet insurance policy; others let you choose your own
Insurance must be comprehensive — third party only does not qualify.
✓Servicing and maintenance
- Scheduled servicing (log book services)
- Unscheduled repairs and mechanical faults
- Brake pads, rotors, brake fluid
- Engine oil, filters, coolant top-ups
- Wiper blades
- Light globes and minor electrical repairs
Any mechanical work on the vehicle is generally claimable. Keep receipts — some providers reimburse you, others have you use their approved network.
✓Tyres
- New tyres (full set or individual)
- Tyre rotation and balancing
- Tyre repair (puncture repair)
- Seasonal tyre changeover (e.g., winter tyres)
Tyres are a significant running cost, especially on EVs which are heavier and wear tyres faster. Worth budgeting more than you think.
✓Fuel or electricity
- Petrol or diesel (for non-EV)
- Home charging electricity costs (for EV)
- Public charging — Supercharger, Chargefox, Evie, BP Pulse, etc.
For EVs, home charging can be included via a cents-per-km rate. Your provider will have a process for this — typically you submit quarterly claims or they use a flat rate based on your km estimate.
✓Roadside assistance
- NRMA, RAA, RACV, RACQ, RAC membership
- Manufacturer roadside assistance (e.g., Tesla Roadside)
Annual membership fees for any recognised roadside assistance provider are claimable.
✓Car wash and detailing
- Automatic car wash
- Hand wash and vacuum
- Interior detailing
- Paint protection treatment (if done at delivery)
- Ceramic coating (if included at purchase)
Car washing is allowed by most major providers. Budget a realistic amount — if you wash your car weekly that adds up to $500–$1,500/year depending on where you go.
✓Accessories at time of purchase
- Floor mats and cargo liners
- Tow bar and wiring (if fitted before delivery)
- Window tinting (if done before/at delivery)
- Roof racks and carriers (if fitted before delivery)
- Dash cam (if fitted before delivery)
Accessories added at or before delivery can generally be rolled into the lease vehicle price, making them pre-tax. Accessories added after the lease starts are usually not claimable — timing matters.
✓Toll roads
- e-TAG / e-Toll account charges
- Linkt, E-Way, and other state toll providers
Tolls are a legitimate running cost and most providers allow them. You'll need to submit toll account statements for reimbursement.
What you CANNOT expense
These are common misconceptions — people assume they're claimable, but they're not:
✗Parking fees and fines
Parking is not a vehicle running cost — it's personal choice. Fines (speeding, parking) are never claimable.
✗Traffic and speeding infringements
Fines of any kind cannot be salary packaged.
✗Home charger hardware and installation
The physical charger unit and its installation cost cannot be included in the lease. However, the ongoing electricity cost of using it can be claimed.
✗Modifications after lease start
Aftermarket accessories added after the lease commences are generally not claimable — this is why timing accessories at delivery matters.
✗Personal items stored in the car
A laptop bag, gym gear, or tools that happen to live in your car are not vehicle expenses.
✗Rideshare or commercial use costs
If you use the car for Uber or delivery work, those business costs are separate from your novated lease — and commercial use may affect your lease terms.
✗Finance costs on a separately owned vehicle
You can only claim running costs on the novated lease vehicle itself.
✗Car loan repayments on a different car
Only one vehicle can be under a novated lease with your employer at a time (with most providers).
How the running cost budget actually works
When you set up your novated lease, you (and your provider) estimate your annual running costs based on how many kilometres you expect to drive. This estimate sets your monthly budget — an amount deducted from your pre-tax pay alongside the finance cost.
Annual km estimate15,000 km/year
Fuel / electricityElectricity at $0.14/km (EV)~$2,100
RegistrationState dependent~$900
InsuranceComprehensive~$1,800
ServicingAnnual log book service~$600
TyresSet every 3–4 years, annualised~$800
Roadside assistNRMA / RAA membership~$160
Car washFortnightly at $20~$520
Total running cost budgetPer year, pre-tax~$6,880
What happens if you don't spend your full budget?
Any unspent running cost budget at the end of your benefit year is returned to you as a cash payment — but post-tax, not pre-tax. So if you budget $6,880 and only spend $5,500, you get roughly $1,380 back, minus income tax at your marginal rate.
This means it's better to be accurate than conservative. Under-budgeting costs you (you spend post-tax on things that should have been pre-tax). Over-budgeting wastes some value when the surplus comes back taxed.
EV electricity tip: Home charging is the expense most people forget to claim. The ATO allows a cents-per-km rate for home electricity used for charging. Keep track of your odometer at the start and end of each year. Some providers let you submit quarterly electricity bills instead — check with yours which method they support.
Accessories — why timing matters
One of the most overlooked strategies is bundling accessories into the lease at the point of purchase. A tow bar, floor mats, window tinting, dash cam, or cargo liner fitted before delivery can be rolled into the vehicle's financed cost — making them pre-tax. The same accessories purchased six months after delivery come from your post-tax pocket.
Before finalising your vehicle order, make a list of every accessory you want and ask your dealer to include them all in the purchase invoice. It's one of the easiest ways to extract extra value from your novated lease.
Does the expense list differ for EVs vs petrol cars?
The same running cost categories apply to both. The main difference is fuel vs electricity. EVs generally cost less to run (lower fuel cost, less frequent servicing, no oil changes), which means your overall running cost budget tends to be lower — but electricity can be a larger proportion of it.
One EV-specific exclusion to be aware of: the home charger hardware and installation are not claimable as a running cost. Many people assume the Wall Connector or other home charging unit qualifies — it doesn't. Only the electricity consumed does.
Frequently asked questions
Can I claim car wash on a novated lease?
Yes — car washing is a running cost that most major providers allow in your pre-tax budget. This includes automatic washes, hand washes, and interior vacuuming. More thorough detailing is also typically allowed. Budget a realistic amount based on how often you actually wash the car.
Can I expense tolls on a novated lease?
Yes. Toll charges (e-TAG, Linkt, E-Way etc.) are a legitimate running cost and can be salary sacrificed pre-tax. You'll typically need to submit your toll account statements to your provider for reimbursement from your running cost budget.
Can I include rego and insurance in a novated lease?
Yes, both are standard inclusions. Registration (including CTP) and comprehensive car insurance can both be paid from your pre-tax running cost budget. Your provider will either pay these directly when they fall due, or reimburse you after you pay them.
What happens if I go over my running cost budget?
If you spend more than your budgeted running cost allowance, the excess is typically topped up from your post-tax salary or billed to you directly. Some providers allow you to adjust your budget mid-year — worth asking about this flexibility when comparing providers.
Can I change my running cost budget once the lease has started?
Most providers allow a budget review once per year or on request. If your circumstances change (e.g., you start driving more), contact your provider to adjust your estimate. Getting the estimate right from the start avoids both over- and under-spending.