Never pay for petrol again and save even more with the EV FBT exemption.
Get behind the wheel of a new EV using your pre-tax salary and save thousands of dollars on repayments and running costs.
If you’re considering a novated lease, a new Electric or Low Emission Vehicle is a smart investment.
Not only will they save you a considerable amount on fuel and have lower overall running costs because of fewer mechanical moving parts, but legislation for the Fringe Benefits Tax (FBT) exemption for electric vehicles has been passed by the Federal parliament. This means you can potentially save around 40% off the cost price.
What it means is that in comparison to a vehicle with an Internal Combustion Engine (ICE), when you salary package a Low Emission vehicle through a Novated Lease, there is no FBT.
As you’d expect with this type of legislation change, there are some regulations. These are mainly around the vehicle type and the maximum value.
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Vehicles that are exempt
The Government have limited the exemption to the following vehicle types.
- Battery Electric Vehicles (e.g. Tesla models, Nissan Leaf, MG ZS EV)
- Hydrogen Fuel Cell Electric Vehicles (New models from Toyota & Hyundai are coming)
- Plug-in Hybrid Electric Vehicles (PHEV) (e.g. Mitsubishi Outlander PHEV, Hyundai Ioniq PHEV, KIA Niro PHEV) – valid only for new leases commencing before 1 April 2025.
What does the exemption NOT include?
The exemption does not extend to vehicles that are not considered to be a ‘car’ under the current FBT legislation, i.e., vehicles designed to carry greater than one tonne or nine passengers or more.
The exemption does not include Hybrid vehicles such as Camry, Corolla, RAV4, etc.
What else do you need to know?
The legislation will apply retrospectively from 1 July 2022 to new vehicles first held and used by a person on or after 1 July 2022.
The maximum value of the car is linked to the Luxury Car Tax threshold amount. This means that at the moment the exemption only applies to eligible vehicles that cost less than $89,332.
A used eligible electric vehicle or PHEV can be leased however it must have never been used before 1 July 2022 and must never have been subject to Luxury Car Tax when it was first purchased.
Even though the vehicle will be exempt from FBT, there will be a Reportable Fringe Benefit Amount (RFBA) on your Income Statement when it is issued at the end of the Financial Year. This may have an impact if you are claiming Government Benefits or paying a HECS/HELP debt.
A Novated Lease on an eligible vehicle can include all the running costs for the vehicle, including Service & Maintenance, Tyre Replacement, Registration Renewal, Comprehensive Insurance and even recharging costs (Electricity).
With all things considered, a Novated Lease on an eligible new Electric or Low Emission vehicle could save you thousands and make it so much more affordable.
Your questions answered
The Government have limited the electric vehicle FBT exemption to the following vehicle types:
Battery Electric Vehicles (e.g. Tesla models, Nissan Leaf, MG ZS EV), Hydrogen Fuel Cell Electric Vehicles (New models from Toyota & Hyundai are coming) and Plug-in Hybrid Electric Vehicles (PHEV) (e.g. Mitsubishi Outlander PHEV, Hyundai Ioniq PHEV, KIA Niro PHEV).
The maximum value of the car is also linked to the Luxury Car Tax threshold amount. This means that at the moment the exemption only applies to eligible vehicles that cost less that $89,332.
The ATO are particular about this, you’ll be leasing the vehicle therefore there is a residual value at the end of the lease term. When you get to the end of the lease, you’ll have a range of options to finalise the lease. You can pay the residual amount and own the car outright, refinance the residual and extend the lease, sell the car, pay the residual and start a new lease or trade the car in and start a new lease.
We’ll be there for you to talk through your options.
Unfortunately not. The full benefits of a novated lease can only be realised with a properly arranged and managed lease. Give us a call to chat about the best outcome possible for you.
Have more questions? Check out our full list of FAQs.
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