If you’re a not-for-profit employee thinking about getting a new or used electric car, we have good news for you. With a novated lease, you can get behind the wheel of your dream electric vehicle, while you save money and the planet! In this article, we’ll show you how, and cover a handful of other salary packaging perks that will make your monthly earnings go the extra mile.
Why an Electric Vehicle?
Electric Vehicles (EVs) are eco-friendly, producing zero emissions and helping to reduce your carbon footprint, which fits perfectly with the sustainability and environmental responsibility values of many not-for-profit organisations. Plus, they look amazing! But how eco-friendly are they? After comprehensive tests, a recent study has finally delivered the verdict of which option is more efficient between petrol/diesel powered cars and electric vehicles – and, you guessed it, EVs came out on top.
Saving money, saving the planet
One of the biggest perks of EVs is the savings. And when you buy one with a novated lease, the savings are impressive. But Electric Vehicles themselves are much cheaper to run than petrol or diesel cars, plus they’re officially more efficient in energy use. EVs also have fewer moving parts than traditional cars, so they cost less to maintain. From an eco-friendly point of view, EVs are not only more energy-efficient but produce no tailpipe emissions, which helps reduce pollution and improve air quality. It’s fair to say that by driving an Electric Vehicle, you’re actively contributing to the fight against climate change.
Now, let’s get you behind the wheel of an EV, and help you save!
What is a Novated Lease?
A novated lease is the financing agreement that you use to buy your Electric Vehicle. It’s an agreement between you, your employer, and a finance company that allows you to lease a car through salary packaging. This means you can use your pre-tax salary to pay off your new car, making your monthly payments much lower. There are a bunch of other amazing additional perks, but more on those later.
How do you get a novated lease?
The first step in getting a novated lease is to speak to your employer and your salary packaging provider, which your employer will have an agreement with. If your employer doesn’t have a provider, you can reach out to a provider who will contact your employer to set up a program. The provider will support you in the process of choosing the car most suitable for you and, in some cases, they can leverage their supplier network to secure the best possible car price. If you decide you want a novated lease on your new wheels or your existing car, the paperwork will be handled for you and will just require your agreement. Your repayment amount will also be automated to come directly from your income every pay period.
Prepare to Save
When you get to the end of your novated lease, there are even more tax savings to come. Through a novated lease, you’re financing the full car cost (with any tax savings taken off). You will choose a term between 1-5 years. At the end of the lease, there is a residual payment as ATO rules dictate. When you reach the end of your lease, there are a number of options for dealing with the residual value –
- You can make the final payment and own the car outright.
- You can trade in your car for a new one, clear the residual value and start a new lease
- You can extend the current lease for an extra period.
- You can even sell your car privately, as long as you pay the residual value. Plus, any profit you make on the sale price compared to your final payment is yours to keep, tax-free.
But wait, there’s more
Because your novated lease accesses your pre-tax salary to cover the costs associated with paying off your car and keeping it running, you’ll save even more money. A novated lease will cover necessities like:
- Petrol/EV charging
- Registration and insurance
- Car maintenance
- New tyres
- Professional car cleaning services
Fringe benefit tax exemption
Normally, employers pay The Fringe Benefit Tax (FBT) when providing cars for private use, but for qualifying electric vehicles, the tax is waived to increase the amount of eco-friendly drivers on the road. For employees, the FBT exemption means the cost of your lease is lower, which means even more savings.
In the driver’s seat
Choosing a novated lease for an Electric Vehicle means you get to drive a cool, efficient car and help the environment at the same time. Plus, with maintenance included, you don’t have to stress about extra costs.
If you’re ready to drive off in your new EV, get in touch with us to discover how CBB The Salary Packaging People can help. With years of experience and all the know-how you could need, we’ve assisted Not-For-Profit organisations and their staff to drive the cars of their dreams, while saving as much as they possibly can.