In addition to the FBT exemption, a Vehicle-Solutions EV novated lease can also reduce your fuel, registration, insurance and maintenance costs. It can also help you take advantage of government incentives.
With the government trying to push Australia forward in the electric vehicle race, this makes an EV lease even more attractive. Read on to learn more about how it works.
What is a novated lease?
EV Novated leases are an affordable way to get behind the wheel of a new electric car. The lease payments are a tax-deductible expense (similar to rent) paid from your pre-tax salary, meaning they reduce the overall cost of owning an EV. Plus, GST is not payable on the car purchase price, making it even more cost-effective.
With advances in battery technology and more investment in expanding charging networks, electric vehicles are now more viable than ever before. But buying an EV outright can still be too expensive for some people. That’s where a novated lease comes in, with the added benefit of an FBT exemption for eligible electric, plug-in hybrid and hydrogen fuel cell cars.
At the end of the lease period, you can choose to buy the vehicle for its book value at a specified amount or return it to your leasing company and take out another one. Or, if the resale values are higher than expected at the end of your novated lease, you may decide to keep it and reap the benefits of owning an EV for the long term.
Compared to buying your EV outright, a Vehicle-Solutions EV novated lease is the most cost-effective and convenient option. Getting an electric car through a fully maintained novated lease means that all running costs such as fuel, registration, insurance and servicing are taken care of.
Benefits of an EV novated lease
Electric vehicles are a great way to reduce your environmental impact. Leasing an EV with a novated lease is one of the most affordable ways to make the switch to zero-emission motoring. It lets you get behind the wheel of a new model with all the benefits for a monthly payment that’s often less than what it would cost to finance a comparable petrol or diesel car over the same period.
How an EV novated lease works
EVs can be expensive to own, but leasing through a novated lease can make them significantly cheaper. It is because an EV qualifies for the Fringe Benefits Tax (FBT) exemption when purchased through salary sacrifice, reducing the price by thousands of dollars per year.
As the popularity of electric vehicles grows in Australia, the government has introduced incentives to encourage its uptake. It includes an FBT exemption for eligible EVs and plug-in hybrid electric vehicles that are first held and used on or after 1 July 2022. With this policy, EVs can be leased at an incredibly affordable rate and help to reduce carbon emissions across our country. It is a huge step forward and is expected to have significant environmental benefits for Australia. EVs will also make our roads safer and more convenient, especially as demand grows and charging stations become more widely available.
How much does an EV novated lease cost?
A novated lease is similar to financing through a car loan, except regular payments are paid from a combination of pre- and post-tax salary, effectively lowering the employee’s taxable income. It can also reduce the amount of GST that’s payable at the end of the lease term.
A full Vehicle-Solutions EV novated lease will generally cost less than an equivalent petrol or diesel car package, thanks to lower fuel and maintenance costs. Additionally, some EVs are capable of putting electricity back into the grid, enabling drivers to offset their electricity bills and further lower running costs.
Moreover, novated leases allow employees to choose an EV that suits their lifestyle and budget, with many options now available on the market. Newer EVs, for example, feature quieter motors and can make the transition to an electric drivetrain an easy one.