A lineup of electric vehicles in Australia with charging stations.

Save Big on Electric Vehicles with Novated Leasing Australia

As electric vehicles (EVs) become more popular in Australia, many drivers are considering making the switch from traditional petrol or diesel cars. With their environmental benefits, lower running costs, and improved performance, EVs offer an attractive alternative. But did you know that there’s a way to make driving an electric vehicle even more affordable?

Novated leasing offers significant savings for employees who are looking to finance their next electric vehicle, especially with recent tax exemptions introduced in Australia. Let’s explore how novated leasing can unlock savings on electric vehicles, and why it’s a smart choice for Australian drivers.

Why Choose Electric Vehicles?

Electric vehicles have seen a surge in popularity, and it’s not just because of their green credentials. EVs offer a range of practical benefits, including:

  • Lower Running Costs: EVs are much cheaper to run than petrol or diesel vehicles. Electricity is more affordable than fuel, and maintenance costs are lower since EVs have fewer moving parts.
  • Environmental Impact: EVs produce no tailpipe emissions, making them far cleaner than traditional vehicles. For eco-conscious drivers, this is a major selling point.
  • Government Incentives: Australia is increasingly offering incentives to encourage the adoption of electric vehicles, making them an even more cost-effective option.

Despite these advantages, the upfront cost of purchasing an EV can be a barrier for some. That’s where novated leasing comes in, helping to reduce the financial burden by offering tax benefits and pre-tax savings.

Fringe Benefits Tax (FBT) Exemption for Electric Vehicles

One of the biggest changes making EVs more affordable for Australian drivers is the Fringe Benefits Tax (FBT) exemption for electric vehicles leased through novated leasing.

Previously, vehicles leased through a novated lease were subject to FBT. However, recent government changes have exempted certain electric vehicles from FBT, meaning that employees who lease eligible EVs through their employer can save even more. This exemption applies to EVs that fall under the luxury car tax threshold, which is currently $89,332 for fuel-efficient vehicles in 2024.

This FBT exemption means your EV novated lease becomes even more tax-effective, allowing you to enjoy a cleaner, more cost-efficient vehicle without the additional tax burden. Check the list of FBT free eligible vehicles.

Additional Tax Benefits of Novated Leasing for EVs

Novated leasing already offers significant tax savings, and these are further amplified when leasing an electric vehicle. Here’s how:

  • Pre-Tax Payments: With novated leasing, the cost of the vehicle and its running expenses—such as charging, insurance, and maintenance—are deducted from your pre-tax salary. This lowers your taxable income, reducing the amount of income tax you pay.
  • Bundled Running Costs: You can package all the running costs of your EV, including charging, registration, servicing, and even roadside assistance, into your lease. This means you pay for everything with pre-tax dollars, further lowering your taxable income.

These tax benefits make novated leasing one of the most cost-effective ways to drive an electric vehicle in Australia, especially when combined with the FBT exemption.

Government Incentives for Electric Vehicles

In addition to the FBT exemption, there are several government incentives in place to encourage the purchase of electric vehicles in Australia. These incentives vary by state, but may include:

  • Rebates on the purchase price of an EV
  • Discounted registration fees for electric vehicles
  • Grants for installing home charging stations

By combining these incentives with the tax savings from novated leasing, Australian drivers can significantly reduce sthe upfront and ongoing costs of owning an EV.

EVs vs. Petrol/Diesel Vehicles: A Cost Comparison

When comparing electric vehicles to traditional petrol or diesel vehicles, the long-term financial benefits of EVs are clear. Here’s how they stack up:

  • Lower Running Costs: Electricity is cheaper than petrol or diesel, which means charging your EV will cost you far less than filling up at the pump. Over time, this can result in thousands of dollars in savings.
  • Reduced Maintenance: EVs have fewer moving parts, so there’s less that can go wrong. This translates into lower servicing and repair costs over the life of the vehicle.
  • Tax Savings: With novated leasing, the pre-tax savings on lease payments and running costs give EV drivers an additional financial edge, especially with the FBT exemption in play.

When you factor in these savings, the overall cost of owning an electric vehicle through a novated lease can be much lower than that of a petrol or diesel car—especially over the long term.

Best Electric Vehicles for Novated Leasing

If you’re considering leasing an electric vehicle, here are a few popular models in Australia that are ideal for novated leasing:

  • Tesla Model 3: One of the most popular EVs globally, the Tesla Model 3 offers impressive range, cutting-edge technology, and falls under the FBT exemption limit in certain variants.
  • Hyundai Ioniq 5: Known for its futuristic design and advanced features, the Hyundai Ioniq 5 offers great value for its price and is an excellent option for novated leasing.
  • Kia EV6: With sleek styling, great range, and advanced features, the Kia EV6 is a highly competitive electric vehicle that’s ideal for Australian roads.
  • BYD Atto 3: A more affordable electric vehicle, the BYD Atto 3 is quickly gaining popularity for its budget-friendly price and solid performance, making it a great option for those looking to get the most out of their novated lease.
  • These vehicles offer great value when leased through a novated lease, allowing you to enjoy the benefits of driving an EV while maximising your tax savings.

Simplifying EV Ownership with Novated Leasing

One of the biggest advantages of novated leasing is the simplicity it offers. All your vehicle expenses—such as lease payments, charging costs, maintenance, and insurance—are bundled into one easy-to-manage payment, which is deducted from your salary.

This not only makes budgeting easier, but it also means you don’t have to worry about unexpected costs like a big repair bill or fluctuating fuel prices. Everything is handled for you, leaving you free to focus on enjoying your new electric vehicle.

Conclusion

Electric vehicles are not only the future of driving, but with novated leasing, they’re also more affordable than ever for Australian drivers. The Fringe Benefits Tax exemption, combined with the ability to package running costs and reduce your taxable income, makes leasing an EV through a novated lease a smart choice for anyone looking to save money while reducing their environmental impact.

If you’re considering an electric vehicle, now is the perfect time to explore your options.

Ready to switch to an electric vehicle? Contact One Car Group for a free consultation and learn how novated leasing can unlock significant savings on your next EV.