RBA Holds Rates at 4.35% — Here's the Novated Lease Angle
The RBA held the cash rate at 4.35%. For PAYG employees, a novated lease is still one of the few legal ways to cut your tax bill. Here's what to know.
The Reserve Bank held the cash rate at 4.35% on 16 June 2026. Treasurer Jim Chalmers called it "a welcome reprieve" — though he was careful not to oversell it, noting it "won't make it any harder" for mortgage holders (Source 1).
Fair enough. A hold is not a cut. Household budgets are still under pressure, and the Treasurer's own statement acknowledged that cost-of-living stress remains real. So where does that leave PAYG employees looking for levers they can actually pull?
What this means for novated lease customers
With rates on hold and living costs still elevated, the logic behind salary packaging a car through a novated lease hasn't changed — it may have strengthened. A novated lease lets you pay for a vehicle using pre-tax salary, which reduces your taxable income. You're not waiting for the RBA to hand you relief; you're structuring your pay packet so the ATO takes a smaller slice.
For employees considering an electric vehicle, the picture is even sharper. The Federal Government's EV FBT exemption — legislated and still in place — means eligible zero or low-emission vehicles on a novated lease attract no FBT at all, according to the ATO's published guidance on the exemption. That's a meaningful cost-of-living offset that doesn't depend on what happens at the next RBA board meeting.
The Treasurer's statement also pointed to the Government "cutting taxes five times in three ways" as part of its cost-of-living response (Source 1). Novated leasing is a complementary, employer-facilitated tool that sits on top of whatever the Budget delivers — it's not either/or.
Common questions
Does a rate hold make novated leasing more or less attractive?
Broadly neutral on the rate side, but the cost-of-living pressure that prompted the RBA's caution is the same pressure that makes pre-tax salary structuring worth looking at. Fewer dollars going to the ATO means fewer dollars you need to borrow.
Does the interest rate affect my novated lease repayments?
Novated lease rates are set by the financier at drawdown, not pegged directly to the RBA cash rate — though the cash rate influences the market. A rate hold generally means no sudden upward repricing on new leases written now.
Is the EV FBT exemption still available in 2026?
Yes. Eligible battery electric and plug-in hybrid vehicles under the luxury car tax threshold remain exempt from FBT when financed through a novated lease, per current ATO guidance. Always confirm eligibility for your specific vehicle with a licensed adviser.
Do I need to own property to benefit from a novated lease?
No. A novated lease is available to any PAYG employee whose employer agrees to participate. It's entirely separate from your mortgage situation.
What does millarX actually do differently?
millarX is ACL-licensed (ACL 569484), AFCA-registered, and Westpac's #1 ranked novated broker. Customer funds sit in segregated accounts — not pooled with operating funds. The goal is a straight answer on whether a novated lease actually works for your numbers, not a sales pitch.