Electric Dreams: Novated Leasing an Electric Vehicle in Australia
30 November, 2023
Australia is embracing the electric vehicle (EV) revolution and novated leasing has emerged as a convenient, flexible way to access an EV while simplifying your budget and taking advantage of tax incentives and government rebates.
For drivers looking to make the switch to zero emissions transport, novated leasing is an attractive option that offers a compelling blend of financial, environmental and practical advantages that allow employees to pay for a new EV and its running costs from their pre-tax income. With a single weekly payment, you can cut the red tape and tailor your EV lease terms to suit your needs, plus EVs under $89,332 are exempt from Fringe Benefits Tax!
This article explores the ins and outs of novated leasing an EV in Australia, including how a novated lease works, the benefits of novated leasing and how to use a novated lease calculator.
How does a novated lease work?
Novated leasing is a three-party agreement involving an employee, their employer and a leasing company - like CarBon Leasing & Rentals. Here's a step-by-step breakdown of how it works:
Vehicle selection: You (the employee) choose the make and model of EV that you’d like to lease.
Novation Agreement: You and your employer then enter into a Novation Agreement, which CarBon provides. This agreement transfers the responsibility for lease payments and vehicle-related expenses from you to your employer.
Lease Payments: Your employer then deducts lease payments and associated costs from your pre-tax income.
Vehicle Use: You have full use of your EV for both work and personal purposes.
Expense Management: The leasing company (CarBon) manages and pays for all vehicle-related expenses, including Finance, Registration, Vehicle Maintenance, Insurance, Tyres, Charging Costs and Roadside Assistance.
End of Lease: At the end of the lease term, you have the option to purchase the vehicle, refinance the residual amount or enter into a new lease agreement.
Benefits - Is an EV novated lease worth it?
If you’re considering an EV, novated leasing offers several advantages. One of the key benefits is the potential to save on income tax. As lease payments are deducted from pre-tax income, this usually results in a lower taxable income, leading to a reduced overall income tax liability.
Save on FBT and GST
The Australian Government has announced that all EVs below the Luxury Car Tax threshold of $89,332 are exempt from Fringe Benefits Tax (FBT). This means all finance and running costs can be paid before you pay tax, with no after-tax contribution required. On a Novated Lease, the vehicle and running costs are also exempt from GST.
In addition, novated leasing provides a hassle-free solution for managing vehicle-related expenses. With finance, registration, vehicle maintenance, insurance, tyres, charging costs and roadside assistance all included, it makes budgeting easy and predictable.
The ability to transfer the lease to a new employer if you change jobs also adds to the excellent flexibility of a novated leasing arrangement.
What is a novated lease calculator and how do I use it?
Before diving into the world of novated leasing, it's essential to understand the financial implications and benefits. A novated lease calculator is a valuable tool that helps individuals estimate the costs associated with leasing an EV. The calculator considers various factors including the EV’s purchase price, lease term, annual kilometres driven and running costs such as maintenance, insurance and charging costs. By inputting these details, you’ll get a comprehensive overview of your potential savings and the impact on your take-home pay.
So why not give it a go? Simply input some basic information into CarBon’s novated lease calculator and find out how much tax you can save on a new EV!
The Future is electric!
Novated Leasing is a convenient and flexible way to access and pay for an electric vehicle and its running costs from your pre-tax salary.
Take advantage of tax incentives and government rebates and get behind the wheel of a new EV today.
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