Australians may be put off switching to an electric vehicle (EV) due to cost, but with a novated lease electric car, they could soon participate in more eco-friendly practices.
Under a recent FBT exemption for electric and low-emission vehicles, salary packaging one through a novated lease may make sense and save significant costs – discover just how much savings there could be below!
Recent trends may have shown you more electric cars on the roads and at local service stations. Electric vehicle adoption has skyrocketed due to government incentives and other factors, most obviously their lower running costs.
Though electric vehicles (EVs) are much less expensive than their traditional counterparts, their initial purchase price remains an obstacle for many Australians. According to a Novated Lease Australia survey, 84% of respondents stated that price deterred them from making the switch; fortunately, however, Labour recently introduced legislation making leasing one on a novated lease more cost-effective.
As well as FBT savings, EVs also qualify for a five per cent import tariff discount under novated leasing, making buying an EV more cost-effective than any other. Novated leasing allows flexible car financing from pre-tax salaries rather than after-tax wages, generating significant income tax savings each pay cycle.
Maintenance and tyres
Electric vehicles (EVs) are generally considered more reliable than petrol cars; however, that doesn’t mean they won’t require maintenance. With a novated lease arrangement, all costs related to vehicle finance, insurance, registration, servicing, tyres and roadside assistance are bundled together into one monthly payment taken directly out of your pre-tax salary – making budgeting simpler while covering all associated with owning and running an EV plus providing GST savings on both its purchase price and running costs.
An electric vehicle on a novated lease can help both you and the environment by saving money. Unlike car loans with payable interest payments, we will work out your budget so you can drive away with the car of your dreams without incurring the financial entanglements that often accompany car loans or cash car purchases.
Electric car discount
As the Australian Government recently implemented a policy offering 5% tariff reductions on eligible EV imports, getting behind the wheel has never been more cost-effective. Through novated lease arrangements, employees now find it simpler than ever to lease an EV for themselves and their employees.
Novated leases enable drivers to salary sacrifice their pre-tax income to cover vehicle running costs such as comprehensive insurance, registration renewal fees and maintenance expenses, fuel costs and fuel storage charges – expenses which will then be deducted from your tax return and reduced your taxable income, saving money while decreasing taxable income.
Electric vehicles (EVs) have long been seen as more sustainable options, yet many potential buyers remain wary due to price. To address this obstacle, Australia’s government recently introduced the Treasury Laws Amendment (Electric Car Discount) Bill 2022 to lower that barrier and encourage adoption.
Before purchasing any vehicle, it’s essential to consider all associated ownership and operation costs carefully. A novated lease electric car offers great financial flexibility while helping make switching to an electric car more cost-effective by taking advantage of government rebates such as the EV discount and incentives that may further lower running costs.
Novated leases enable you to deduct the costs of your vehicle from your pre-tax income each pay cycle, potentially providing significant income tax savings and lower charging and maintenance expenses compared to traditional petrol or diesel vehicles. Furthermore, zero-emission or low-emission vehicles used for private travel qualify for Fringe Benefits Tax exemption and could further lower running costs.
Employees earning $80,000 who sacrifice an MG ZS Essence EV and drive it 20,000km annually over five years will save more than $10K due to current FBT rules and indicative EV prices.
Financially speaking, a novated lease electric car may provide significant financial advantages; however, it’s crucial to find out which lease arrangement best fits your situation if you are close to moving into a different tax bracket. Consult an independent legal, taxation and finance expert before deciding whether you choose a new leasing or another vehicle purchase arrangement.