What does FBT and ECM mean?
Before your novated lease starts
Fringe Benefits Tax (FBT) is a tax which is applied to benefits you receive from your employer that are not in the form of cash salary or wages. For example, a novated lease is a benefit outside your cash salary or wages – so it is subject to FBT. As of the 1st April 2017, the FBT rate is 47%.
This is where the ECM bit kicks in. A standard novated lease calculation, the ECM – or "employee-contribution" method – helps offset any FBT you may be liable to pay on your novated lease. By making after-tax as well as pre-tax payments you reduce the taxable value of your car and minimise the risk of FBT liability at the end of the FBT year (31 March).