2026 Federal Budget: What PAYG Employees Need to Know
The Albanese Government's 2026 Budget backs innovation and investment. Here's what it could mean for your novated lease and salary packaging. Read on.
The Albanese Government handed down its 2026 Federal Budget on 12 May, billing it as a productivity package built around innovation and investment. According to the Treasury Ministers release, headline measures include a $10.2 billion reduction in annual regulatory costs, a projected $13 billion annual boost to long-run GDP, and $400 million in additional R&D support for young firms and start-ups.
Most of that is aimed squarely at business owners and investors. But any Budget that reshapes how income, investment, and assets are taxed can have downstream effects on PAYG employees — particularly those using salary packaging tools like novated leasing.
What this means for novated lease customers
The Budget announcement [Source 1] flags consultation on capital gains tax reforms, including treatment of early-stage and start-up businesses. While CGT changes don't directly touch novated leasing, they signal the Government is actively reviewing how Australians interact with the tax system — which is worth watching.
On the EV front, the existing FBT exemption for eligible electric vehicles remains intact under current legislation. This Budget did not announce changes to that exemption, so if you're considering an EV on a novated lease, the rules you've heard about still apply — for now. Always confirm the current rules with a licensed adviser before signing anything.
The broader productivity push — reduced red tape, stronger business investment incentives — could support wage growth over time, which indirectly strengthens the case for salary packaging. More taxable income means more potential benefit from structuring part of your remuneration through a novated lease.
Common questions
Did the 2026 Budget change the EV FBT exemption?
The Budget announcement did not announce changes to the FBT exemption for eligible battery electric vehicles. The exemption introduced under the Treasury Laws Amendment (Electric Car Discount) Act remains in place, but policy can change — check the ATO website or speak to a licensed adviser for the latest position.
Does the capital gains tax consultation affect novated leasing?
Not directly. The CGT consultation flagged in this Budget is focused on early-stage and start-up businesses. Novated leasing is an FBT and income tax matter, not a CGT matter.
How does a novated lease actually save me money?
A novated lease lets you pay for a car — including running costs — from your pre-tax salary, reducing the income you're taxed on. The size of any benefit depends on your income, vehicle choice, and individual circumstances, so we don't quote generic figures.
Should I wait to see what other Budget measures are confirmed before getting a novated lease?
Nothing in this Budget announcement directly changes the novated lease framework. If a vehicle and the current rules suit your situation, waiting rarely improves the outcome — but that's a call you should make with proper advice.
Is millarX able to advise me on tax?
millarX is ACL-licensed (ACL 569484) and AFCA-registered, and can walk you through how novated leasing works in plain English. For personal tax advice specific to your situation, you'll need a registered tax agent.