Novated Leases on Electric Vehicles
Good for the environment, good for your wallet. Discover how you can get a brand new electric vehicle and save 45% on average compared to traditional financing.
The best time to buy an electric vehicle or plug-in hybrid
The Electric Car Discount effective July 1st 2022 made electric vehicles (EVs), including plug-in battery electric cars, plug-in hybrid cars and hydrogen fuel cell cars much, much more affordable.
Vehicles priced under $89,332 (plus on road costs) will be exempt from the 47% Fringe Benefit Tax (FBT) that applies to most other cars on the market.
This means that under a novated lease structure, you can now pay for your EVs finance and running costs before tax, resulting in a cash saving of up to 57% compared to traditional finance. On a standard Tesla Model 3 this equates to a tax saving of around $13,300 per year on a 4 year lease.
The Electric Car Discount also includes a 5% reduction in Import Tariffs which will result in a further reduction in the purchase price of EVs under the $89,332 mark.
See what you could save
Use our novated lease pricing calculator to see your potential savings.
The Savings Speak For Themselves
With an FBT exempt vehicle, you’re paying 100% of the cost of leasing and running your car pre-tax, leading to some pretty impressive savings. You also avoid paying GST on the car and other car related expenses. Getting an EV through a novated lease can save you tens of thousands when compared to purchasing outright or on a traditional loan.
Use our novated lease calculator to get an instant estimate on how much you can save. The calculation includes the car, electricity and on-road running costs to maximise your savings. It’s inclusive of fees and there are no hidden costs – what you see is what you get.
Calculate Your Savings
Lower On-Road Running Costs
The cost of petrol is reaching new highs in Australia, so it makes sense that not paying for petrol each week will leave you with more money in your pocket.
Better For The Environment
No petrol = no CO2 emissions. Not sure what else we can say on the matter. Going green has never been more affordable thanks to novated leasing.
Higher Resale Value
An electric vehicle, fitted out with all the latest technology is going to be much easier to sell and likely to give you a higher trade in value when you move onto your next car.
EVs, Novated Leases and FBT Exemptions
It’s essentially the same as claiming 100% business use for your car – but you don’t have to provide a log book.
A novated lease is an agreement between yourself, your employer, and a novated lease provider. Instead of you borrowing money to buy your car, or paying for it outright, you enter into a lease agreement with a leasing provider for a fixed period, generally 1 - 5 years. Your employer then deducts the lease payment from your salary in pre and post-tax portions. The pre-tax portion reduces your taxable income, which in turn reduces the income tax (PAYG) that is deducted from your pay each pay-cycle.
The portion of the lease cost that can be deducted from your salary in pre and post-tax form is determined by the amount of FBT payable on the lease arrangement. However under the Electric Vehicle Discount FBT does not have to be accounted for, so the entire lease and running costs can be deducted from your salary pre-tax.
Let’s say your monthly gross salary was $7,000 and your lease and running costs were $1,000 per month. On a $7,000 income you would normally pay around $1,625 in PAYG. However with an EV Novated Lease, the $1,000 lease and running costs are deducted from your $7,000 gross income to give you a taxable income of $6,000. The PAYG payable on $6,000 is around $1,275.
So in this example a novated lease using the Electric Vehicle Discount will give you a monthly income tax saving of around $350 per month.
Looking at these figures another way, if the lease and running cost were $1,000 before the novation, and the novation saves you $350, the after tax cost (or net cost) of the lease is $650 per month – a saving of 35%.
With a novated lease you also avoid paying GST on your vehicle purchase price and running cost, resulting in a further 10% saving.
So adding the GST saving to the income tax saving results in a whopping 45% saving when compared to paying for finance and running costs post tax!