The cost of electric vehicles has been a major hurdle to widespread adoption. Purchasing an EV outright can be prohibitively expensive; even leases are typically higher than traditional cars. Fortunately, the FBT exemption makes leasing an EV much more affordable. EVs are eligible for the novated lease electric vehicle tax benefits, and many dealers can roll this into the lease payment, saving customers thousands in the long run.
The FBT exemption also allows employees to salary package their EV, making it even more cost-effective than a standard car loan or outright purchase. By paying for the vehicle with a combination of pre-tax and post-tax income, an employee can reduce their taxable income by up to 37%, saving them thousands of dollars each year.
The FBT exemption also applies to EVs that meet the Luxury Car Tax (LCT) threshold, which means they can be used in a novated lease without incurring any FBT. It is a significant benefit, as LCT can make a huge difference to the cost of an EV. However, it’s important to remember that this exemption only applies to the novated lease portion of the car. The remaining 80% of the car’s costs are subject to FBT. It can include fuel, maintenance and registration. For this reason, it’s essential to consider the total cost of an EV when considering how to finance it.
Save on registration costs.
Novated lease is a way to pay for your car using pre-tax salary. If you choory package an electric vehicle, you’ll save the 47% Fringe Benefits Tax (FBT). It removes one of the major costs of purchasing an electric car and can make it more affordable.
In addition to saving on fuel costs, they have novated lease electric vehicle tax benefits that lower costs to register than traditional vehicles. That is because they aren’t subject to the same registration fees. However, it’s worth noting that there are some restrictions around the types of electric vehicles that can be registered.
The federal EV tax credit can also be attractive for those looking to purchase an EV. The government allows dealers to apply the credit to the price of a vehicle before setting lease terms, effectively lowering the cost to customers.
As a result, EVs can be up to $4,700 a year cheaper under a novated lease than they would be if purchased outright.
Save on maintenance costs.
If you’re considering an electric vehicle, there are plenty of options on the market. However, diving into a new vehicle type can be daunting for many drivers. Leasing an EV is a great option for those who want to try out the experience without committing to a full-time purchase. It also allows you to take advantage of federal EV tax credits without worrying about claiming them through your taxes or meeting restrictive income limits.
While it can be tempting to go with the first dealership you visit, shopping around for an EV lease is always smart. Different dealerships may offer different monthly payments and down payment requirements. Shopping around can put you in a better bargaining position, making finding an EV lease that fits your budget easier.
With the introduction of the FBT exemption on novated leases, choosing an electric car has become even more affordable. The lease expenses are salary sacrificed from your pre-tax income, which reduces your taxable income and allows you to save on fuel, registration, maintenance, servicing, insurance, energy, and other vehicle costs.
As a result, choosing an electric car on a novated lease can be up to $5,700 cheaper than if you were to buy one outright. The savings could be even greater if you choose a more expensive model eligible for the FBT exemption.
Save on tax
If you’re shopping for an EV, one of the novated lease electric vehicle tax benefits is you save on the cost of GST. By salary packaging the car payments from your pre-tax income, you’ll be paying less tax upfront, lowering your taxable income and helping you pay for other expenses like registration and maintenance costs.