If you are considering an electric car, a novated lease green electric vehicle is one of the best ways to get behind the wheel. Not only can you save on registration and fuel costs, but you could also be eligible for government incentives.
Legislation has recently passed that includes an FBT exemption for EVs. It means that employees whose salaries sacrifice an EV will be able to save money on their taxes.
Save Money on Your Taxes
As a novated lease driver, you’ll enjoy the federal government’s tax concessions on electric cars. These are based on the vehicle’s price and manufacturing rate and a range of other state and local incentives that apply.
It means you can get an EV for much less than you might pay for a similar car without the perks of a novated lease. However, it’s important to remember that the EVs that qualify for these tax credits are limited. That’s because the IRA provisions that Manchin crafted meant the vehicles had to be manufactured in the U.S. and use minerals sourced in specific ways (excluding China). It effectively narrowed the field of eligible EVs to a small group of models.
In addition, if you decide to take on a novated lease, your salary-packed EV will be FBT exempt if it falls below the luxury car tax threshold of $89,332 (or $84,916 in 2022-2023). It means all your vehicle expenses come from pre-tax wages, which could save you thousands of dollars throughout the lease.
Additionally, EVs tend to cost less to maintain than traditional vehicles. That is because they have fewer moving parts and generally need less maintenance. The battery cells and powertrain will also last longer, so you must replace them less frequently. Finally, novated lease payments are fixed, so you’ll know exactly what to expect each month. It will make it easier to budget and plan your expenses.
Get a New EV
You may have noticed a spike in the number of electric vehicles on the roads and at your local servo recently. It is due to a combination of factors, including the rising cost of fossil fuels and government incentives, that make buying an EV more affordable. Regardless, now is an excellent time to consider the benefits of a lease green electric vehicle.
EVs are the future of transportation. They produce no exhaust emissions, so they help to cut air pollution and contribute to a healthier planet. They also use recycled batteries that can be used again after use, reducing the need to replace parts and reduce landfill waste. If you’re ready to ditch your petrol or diesel vehicle for an EV, a salary-packed novated lease is the best way to do it.
An EV is cheaper than leasing a traditional car or buying one outright, thanks to state and federal rebates. And, by reducing your pre-tax income through salary sacrificing, you can save even more on running costs.
The Australian government has made it easier for people to get an EV by exempting them from the Fringe Benefits Tax (FBT). It means you can get behind the wheel of a new zero or low-emission EV without paying tax each month. The EV exemption could save you between $4,000 and $10,000 per year in taxes.
Take Advantage of Government Incentives
EVs produce zero tailpipe emissions, which helps reduce harmful air pollution that can contribute to health issues. Additionally, they use electricity that is typically generated from renewable sources. It means you’re also reducing Australia’s reliance on imported fossil fuels.
The EV tax credit is one of the biggest incentives to encourage consumers to purchase an EV. However, if you’re considering leasing an EV instead of buying it, there’s a workaround that could help you save even more money.
But if you choose a novated lease green electric vehicle, the Treasury Department considers it to be a commercial transaction that’s exempt from luxury car tax (LCT), and this makes it possible for dealers to pass the tax credit savings on to you in the form of a rebate or reduced lease price.
Moreover, you can take advantage of additional state and local incentives like free parking in select areas or utility company breaks on home charger installations. And because a novated lease is paid out of your pre-tax salary, you can get all these savings without sacrificing personal income.