Electric Vehicles
Transition to Electric Vehicles (EVs)
Electric vehicles (EVs) are rapidly gaining popularity worldwide as a cleaner, more cost-effective alternative to petrol cars. Recognising their importance in reducing emissions, the Australian Government has introduced a range of policies and incentives to drive EV adoption – one of the most significant being the Electric Car Discount.
This initiative makes battery electric vehicles more affordable by removing the fringe benefits tax (FBT) from eligible new models, provided they meet specific criteria. By encouraging individuals and businesses to transition to EVs, this policy also increases the availability of affordable second-hand electric vehicles, making the switch even easier for more Australians.
Benefits of novated leasing an EV
While the Electric Car Discount already provides strong financial benefits, these savings can be maximised even further with a novated lease. A novated lease is a tax-effective way to finance a vehicle, allowing an employee to pay for it using a combination of their pre-tax and post-tax salary, reducing their taxable income and offering potential tax savings.
When leasing an EV through a novated arrangement, the entire vehicle payment is deducted from an individual’s pre-tax salary, further increasing their savings, while all vehicle-related expenses can also be consolidated into a single, convenient payment.
Key advantages of novated leasing for EVs:
FBT Exemptions
Eligible EVs priced below the Luxury Car Tax threshold ($91,387 for FY2023-2024) qualify for exemptions from Fringe Benefits Tax (FBT), making them a cost-effective choice for environmentally-conscious drivers.
Environmental and Technological Advantages
Embrace a zero-emission lifestyle while benefiting from cutting-edge automotive technology that enhances your driving experience.
Tax Savings
Enjoy significant financial benefits, including no GST on both the purchase price and ongoing running costs. By utilising pre-tax salary for your payments, you can maximise your income tax savings.
Streamlined Convenience
Simplify your financial management by bundling all vehicle expenses into a single payment. This not only makes budgeting straightforward but also minimises administrative tasks, allowing you to focus on what matters most.
Potential Savings
Under the Electric Car Discount Policy, eligible vehicles—including battery electric vehicles, hydrogen fuel cell electric vehicles, and plug-in hybrid electric vehicles (until April 1, 2025)—can benefit from Fringe Benefits Tax (FBT) exemptions.” to “Under the Electric Car Discount Policy, eligible vehicles – including battery electric vehicles and hydrogen fuel cell electric vehicles – can benefit from Fringe Benefits Tax (FBT) exemptions.
By salary packaging an electric vehicle through a novated lease, employees in Australia can achieve substantial annual savings, making this option a cost-effective and convenient way to own and operate an EV. This arrangement not only enhances financial flexibility but also promotes a more sustainable driving experience.
The table below also illustrates estimated savings for a BYD Seal Performance under a novated lease with the benefit of the FBT EV exemption versus an outright purchase (where the exemption wouldn’t apply).
MY25 BYD Seal BEV Dynamic RWD Auto Sedan– Estimate Annual Savings Breakdown. Retail Price: $42,718.18. Novated lease deductions: $270.03/week| Novated Lease (with FBT EV Discount) | Outright Purchase (without EV Discount) | |
|---|---|---|
| Pre-tax salary | $120,000 | $120,000 |
| Estimated Running costs (pre-tax) | -$16,487.12 | -$0 |
| Taxable income | $103,512.88 | $120,000 |
| Income tax payable | -$23,912 | -$29,188.00 |
| Estimated Running costs (post-tax) | $0.00 | -$18,135.83 |
| TAKE HOME ANNUAL PAY | $79,600.88 | $72,676.17 |
Over the course of a four-year lease period, these savings can add up significantly. In the above example, a novated lease arrangement when travelling 20,000 kms per year in NSW could potentially save the employee $27,698.76 over a 4-year lease.
Eligibility of EVs
To qualify for the Electric Car Discount, a vehicle must meet three key criteria:
- It must be a battery electric vehicle (BEV) (PHEVs were eligible until 1 April 2025).
- It must be priced below the Luxury Car Tax threshold of $91,387 (FY2024-25).
- It must have been first purchased or used after 1 July 2022.
As more EV models enter the Australian market, the range of eligible vehicles continues to expand –ensuring there’s an EV to suit every driver’s needs.
Why Choose an EV Through Novated Leasing?
Financially Savvy Ownership: Although electric vehicles (EVs) may require a higher initial investment compared to petrol vehicles, the significant savings on fuel and maintenance over time make them a prudent financial decision.
Dedicated Expert Assistance: Receive expert support and information on selecting the perfect EV, managing your lease, and ensuring you take full advantage of available savings.
By opting for our novated leasing solutions for EVs, you can enjoy considerable savings and expert support at every stage.
Partnership and Expertise
NALSPA represents Australia’s leading novated lease providers, who work closely with vehicle suppliers to make EVs more accessible and affordable for working Australians. Our members strive to reduce wait times, improve choice, and simplify the process of comparing EVs, hybrids, and traditional petrol vehicles.
Transitioning to an electric vehicle is a progressive step that benefits both the environment and your finances. With a range of government incentives, expert support from trusted providers, and significant tax savings available through novated leasing, there’s never been a better time to make the switch.
EV FBT Exemption - General FAQ
The FBT exemption removes the fringe benefits tax that would normally apply to a salary-packaged or novated lease vehicle.
- FBT is usually paid by employers on non-cash benefits provided to employees.
- With a petrol or diesel car lease, a portion of the lease payments is taken pre-tax, while the rest comes from after-tax salary to offset FBT.
- However, eligible electric vehicles are fully exempt from FBT, meaning the entire lease payment can be made pre-tax, increasing tax savings for employees.
As a result of the FBT exemption, on a typical $60,000 EV this can result in a savings of around $5,000 or more per annum.
From April 1 2025, only battery electric vehicles qualify for this exemption.
To be eligible the car must have both been held and used on or after 1 July 2022. The exemption applies to battery electric passenger vehicles that can carry a load of less than one tonne and are under Luxury Car Tax fuel efficient threshold of $91,387.
Normally, with a novated lease, you pay Fringe Benefits Tax (FBT) on the vehicle, which is a tax that employers pay on benefits provided to employees. For petrol or diesel cars, some of the lease payments are made from your pre-tax salary, and the rest from after-tax salary to account for FBT.
However, electric vehicles under $91,387 are exempt from FBT, meaning your entire car payment can be made from your pre-tax salary, significantly reducing your taxable income and increasing savings. This makes EVs an even more cost-effective option when using a novated lease.
Absolutely! You can package the cost of electricity for your electric vehicle (EV) as part of your novated lease. To do so, you’ll need to install a smart meter to measure the electricity used by your EV or set up a dedicated in-home charger with a metering function. This allows you to include the electricity costs in your lease package, helping you save on taxes and manage your expenses more efficiently.