One way to do this is by choosing more sustainable and eco-friendly vehicles. Recently, we've seen a growing trend of electric vehicles (EVs) under novated leases.
And it's no surprise - the Federal Government's Treasury Laws Amendment (Electric Car Discount) Bill 2022, which includes the exemption of paying Fringe Benefits Tax (FBT) on eligible EVs, is set to accelerate this trend. The legislation's goal is to drive more EV adoption in Australia and encourage car manufacturers to import more affordable electric models.
Under the discount, fringe benefits provided on or after 1st July 2022 for eligible zero or low-emission vehicles are exempt from FBT, as long as the vehicle is held and used after 1st July 2022. This includes Battery Electric Vehicles, Hydrogen Fuel Cell Electric Vehicles and Plug-in hybrid Electric Vehicles (PHEVs) until 1st April 2025.
Who does the FBT exemption apply to?
The FBT exemption only applies to the personal use of electric cars operated by businesses, or financed under a novated lease. This means that novated leases on EVs differ from that of fuel-powered vehicles, because there is no post-tax component to deductions. This ultimately means that the cost to employees of entering salary sacrificing arrangements for an eligible EV will be significantly less than it would have been previously.
How much could I save when I get a novated lease on an EV?
The potential savings from the FBT exemption could be substantial, with the Treasurer stating that a $50,000 model could be up to $4,700 a year cheaper under a salary sacrifice arrangement. And for more expensive models – up to the $84,916 (Increasing to $89,332 from 1 July 2023) luxury car tax threshold for fuel-efficient vehicles – the savings could be even higher, further complementing the benefits of novated leasing. Additionally, Electric cars may be cheaper to run and maintain, making them even more attractive to potential drivers.
Our years of experience in novated leasing means we understand the benefits it could bring our clients, including those that relate to the increasing number of eco-friendly vehicles our customers are leasing. We are committed in supporting our clients' transition to low and zero-emission vehicles in Australia.
If you're considering an electric or hybrid vehicle for your next car, give us a call on 08 8980 5799 and let us help you stay informed about the options available to you.
