Thanks to new legislation, FBT (Fringe Benefits Tax) is exempt on certain EVs and PHEVs, making them an enticing choice for those seeking to salary package an electric car through a novated lease. However, you must seek legal and financial advice before salary packaging an EV.
The exemption means that zero or low-emission cars first held and used on or after July 1 2022, can be leased without incurring FBT. Read on to find out more. For quality FBT novated lease electric vehicle, click here.
Save Money on Taxes
In a novated lease, you pay for your new vehicle using pre-tax salary (or, in some cases, post-tax income) and deduct it from tax. It effectively lowers your taxable income, making it easier to afford an EV.
However, if your employer provides you with a work car for private use, you can be hit with fringe benefits tax (FBT). Using a statutory formula or operating cost method to calculate liabilities, FBT is extracted from the gross-up value of your car, including the car’s purchase price, loading, and running costs.
But, thanks to new legislation passed in 2022, EVs and PHEVs valued below the luxury car threshold of $84,916 are exempt from FBT when purchased via a novated lease. It makes EVs and PHEVs a much more appealing novated lease option. The tax exemption can help you save thousands per year on your EV.
Reduce Emissions
The emissions of EVs are lower than petrol and diesel cars, which have been proven to benefit the environment. Additionally, EV batteries can be recycled at the end of their lifespan to prevent harmful materials from polluting our soil and waterways.
A novated lease takes the cost of your car and its running costs, like insurance, fuel and tyres, off your taxable income. It means you’re able to save thousands each year in tax.
The FBT novated lease exemption on EVs has been designed to encourage people to switch to these greener cars. It is because EVs have significantly lower operating costs than petrol and diesel cars, which can save you money over the long term. It is just one of the reasons why Maxxia has seen a four-fold increase in enquiries for EV novated leases this financial year. It’s a great time to buy or lease your new EV. The latest EVs, such as the Kia Niro Electric, Hyundai Kona Electric and the all-new Polestar2 models from Volvo’s all-electric offshoot, qualify for this FBT exemption.
Save Money on Maintenance
If you want the peace of mind and savings of a new electric car, an FBT novated lease may be your best choice. EVs have fewer moving parts than petrol vehicles, so you can expect reduced maintenance costs and lower running expenses.
The Australian government passed legislation in late 2022 to exempt EVs and plug-in hybrids from Fringe Benefits Tax (FBT) when leased with a novated lease. It has made EVs more affordable for employees via salary packaging arrangements, encouraging greater uptake. For quality FBT novated lease electric vehicle, click here.
The FBT exemption applies to EVs and PHEVs valued under the luxury car tax threshold of $84,916. However, an EV still requires servicing, so it’s essential to choose an EV dealership that is experienced and offers competitive rates on services such as oil changes and tyre replacement.
Get a New EV Today
A novated lease is a unique type of salary packaging that allows you to package your car payments, fuel/electricity and other related expenses from your pre-tax salary. It means you can save 47% on FBT compared to buying an EV outright.
It’s important to note that, despite the FBT exemption, an employee will still be required to declare the taxable value of their novated lease as part of their annual tax return. However, this can be offset against any income tax paid by the employee in the year the lease is taken out.