If you’re ready to join the hundreds of thousands of Australians enjoying the environmental and cost benefits of driving an electric vehicle, you’re in luck, it’s never been easier. Yes, not only can you get an electric vehicle on a novated lease, you might be able to save big thanks to generous government discounts – helping you cut not just your emissions but also your expenses!
Curious? It’s not as simple as running out to your nearest EV dealer. To get the full benefit of your novated lease and the relevant discounts, there are a few eligibility criteria you’ll need to meet and facts you should be aware of. Alliance Leasing knows the novated lease space like the back of our hand – let us help you make a more informed choice so you can drive away in confidence.
What are the benefits of getting an electric car on a novated lease?
Fringe Benefits Tax Exemption
Separately, an electric car and a novated lease can save you money, but put them together and you could see the benefits multiply. Why? Because some electric cars are exempt from fringe benefits tax (FBT) – levied on some non-cash benefits provided to employees and currently taxed at 47%.
As a condition of providing the novated lease, many employers require employees to structure the lease using the Employee Contribution Method, in which your lease payments are made using a combination of pre- and post-tax income. This reduces your employer’s FBT liability, but means that you’re not getting the full benefit of your lease. Choosing an electric car side-steps all of this, meaning that 100% of your novated lease payments are made from your pre-tax income, delivering maximum value at tax time.
Government Incentives
Many states and territories also offer further benefits for EV drivers, including one-time rebates, registration discounts, and subsidies – all of which your provider could pass on to you through your repayments. You could save thousands over the life of the loan – talk to your novated leasing provider to learn more.
GST Savings & Simplified Running Costs
On top of this, you’ll enjoy all the great benefits of a novated lease, bundling fuel, servicing, registration, insurance, and more into a single regular payment. Did you know that cars valued below $69,634 are effectively GST-free? It’s true! Your lease provider will be able to claim a credit for up to $6,334 of GST paid when acquiring your car, passing the savings on to you in reduced payments. Find out how much you could save with our novated lease calculator.
What EVs are eligible for a novated lease?
There are a few boxes your new ride needs to tick in order to qualify for the fringe benefit exemption. Crucially, it must be a zero or low emissions vehicle – that is a battery electric (BEV) or hydrogen fuel cell electric vehicle (FCEV) designed to carry less than one tonne and fewer than 9 people. Plug-in hybrid electric vehicles (PHEV) first used before 1 April 2025 and under an existing financial commitment are still exempt, but newly purchased PHEVs are not eligible for the FBT exemption.
Additionally, to qualify the car cannot have been first used (that is available for use by any entity or person) before 1 July 2022. This does not reset when the car is sold from one owner to another. The value of the car must also be less than the current luxury car tax threshold of $91,387 for fuel efficient vehicles. The car must also only be used by a current employee and their associates (such as family members). As long as you satisfy these requirements, you can choose any electric vehicle you want – there are no restrictions stopping you from driving away in a new BYD or Tesla!
Want to learn more about getting behind the wheel of an electric car? Contact us today to learn more about the tax-saving opportunities you could benefit from.
