How a BMW salary sacrifice changes your fortnightly take-home pay

How a BMW salary sacrifice changes your fortnightly take-home pay

If you are an employee and your employer agrees, a BMW salary sacrifice (also called a novated lease) lets you pay for a car with pre-tax dollars. The Australian Taxation Office explains that salary sacrificing reduces your taxable income, which means less tax and Medicare levy are taken from each pay. But the effect on your fortnightly bank deposit is not always straightforward.

What a novated lease does to your pay

Under a standard novated lease, your employer deducts the lease payment from your salary before tax. The ATO gives this example: an employee earning $65,000 who sacrifices $17,353 for a car sees their taxable income drop to $47,647. The income tax falls from $10,288 to $5,082, and the Medicare levy from $1,300 to $953. However, the employee also loses access to the sacrificed amount and must cover any car expenses themselves. If they make an employee contribution of $7,000, the taxable income is higher but the net disposable income can be better – $43,593 compared to $41,912 without packaging.

Fortnightly take-home changes

Your fortnightly pay changes because:

• Tax brackets – Lower taxable income may move you into a lower marginal rate. For 2026–27, the 30% bracket starts at $45,001. If your sacrifice drops you below that, you save 30c per dollar sacrificed.
• Medicare levy – The full 2% applies to most full-time salaries. But if your reduced income falls below the single lower threshold of $28,011, the levy phases in at 10c per dollar until $35,013. The ATO publishes these thresholds for the latest year. Tax and Medicare
• Superannuation – Your employer must still pay the 12% super guarantee on your original salary, not the sacrificed amount. So your super balance is protected. Super

BMW Finance notes that a novated lease may also allow GST input tax credits, which can lower the lease cost. Their example assumes a $1,300 monthly lease on a $130,000 salary, but they do not give a specific take-home figure because it depends on your employer’s FBT status and whether the car is an electric vehicle (which may be FBT-exempt).

What stays the same

• The national minimum wage is $26.44 an hour and $1,004.90 a week. Salary sacrifice does not change your base hourly rate.
• Your fortnightly pay cycle remains; the tax withheld is recalculated each pay period using the ATO’s tax withheld calculator, which accounts for salary sacrifice arrangements.
• The Medicare levy surcharge (if applicable) is based on your income for surcharge purposes, which may be different from taxable income. Check with your tax adviser.

Should you consider a BMW salary sacrifice?

The ATO warns that salary sacrifice can affect government benefits, child support, and study loan repayments. It is not a simple tax dodge. The net benefit depends on your marginal tax rate, the lease cost, and whether you make employee contributions to reduce FBT. Use the Take-home pay calculator to estimate your fortnightly amount with and without packaging. For a detailed comparison, see our Salary packaging guide.

Important note

This article is a general explanation only. It does not constitute tax advice. The figures for 2026–27 are based on published ATO rates and the Fair Work Ombudsman minimum wage. Your personal circumstances may differ.