100% pre-tax deductions on all running costs for plug-in and Hybrid Ev’s.
Investing in a new Electric Vehicle is wise if you’re currently weighing your options for a novated lease.
Not only can you expect significant savings on fuel costs and lower overall running expenses thanks to fewer mechanical moving parts, but there’s more good news: Federal parliament has passed legislation for the Fringe Benefits Tax (FBT) exemption for electric vehicles. This translates to potential savings of up to 40% off the cost price, making a Low Emission vehicle an even more attractive option.
It’s important to note that there are specific regulations to keep in mind with this legislation change, particularly pertaining to the vehicle type and maximum value.
Nevertheless, by choosing to salary package a Low Emission vehicle through a Novated Lease, you’ll be able to avoid FBT in comparison to a vehicle with an Internal Combustion Engine (ICE). Don’t miss out on this fantastic opportunity to make an intelligent investment that benefits your wallet and the environment.
100% tax deductable vehicle expences
Imagine cruising around in a brand-new EV while using your pre-tax salary to save thousands on repayments and running costs. It’s a win-win situation that you want to take advantage of!
- SAVE on the Purchase Price with our National Buying Power
- SAVE on Servicing and Operating Costs
- SAVE on Finance Costs
- SAVE the GST
- SAVE on Income Tax
The Government have limited the exemption to the following vehicle types:
- Full Electronic Vehicles & Plug-in Hybrid Vehicles
- Battery Electric Vehicles (e.g. Tesla models, Nissan Leaf, MG ZS EV)
- Hydrogen Fuel Cell Electric Vehicles (New models from Toyota & Hyundai are coming in 2023)
- Plug-in Hybrid Electric Vehicles (PHEV) (e.g. Mitsubishi Outlander PHEV, Hyundai Ioniq PHEV, KIA Niro PHEVtT
What does the exemption NOT include?
- The exemption does not extend to vehicles not considered to be a ‘car’ under the current FBT legislation, i.e. vehicles designed to carry more than one tonne or more or nine passengers or more.
- The exemption does not include Hybrid vehicles such as Camry, Corolla, RAV4, etc.
What you need to know
- The legislation will apply retrospectively from 1 July 2022 to vehicles first held and used by a person on or after 1 July 2022.
- The maximum value of the car is linked to the Luxury Car Tax threshold amount. This means that, at the moment, the exemption only applies to eligible vehicles that cost less than $89,332.00 So, the purchase price must fall under the Luxury Car Tax Threshold of $89,332.00
- Even though the vehicle will be exempt from FBT, there will be a Reportable Fringe Benefit Amount (RFBA) on your Income Statement when it is issued at the end of the Financial Year. If you claim Government Benefits or pay a HECS/HELP debt, this may impact you.
- A Novated Lease on an eligible vehicle can include all the running costs for the vehicle, including Service & Maintenance, Tyre Replacement, Registration Renewal, Comprehensive Insurance, and even recharging costs (Electricity).
- With all things considered, a Novated Lease on a new Electric or Low Emission vehicle could save you thousands and make it so much more affordable.
- The proposed exemption period is for 36 months (30 June 2025), at which time it will be reviewed.
The ATO has strict guidelines regarding the leasing of a vehicle, which involves a residual value at the end of the lease term. Upon reaching the end of the lease, you will have various options to conclude it. These options include paying the residual amount to own the car, refinancing the residual and extending the lease, selling the car, paying the residual and initiating a new lease, or trading the car in and starting a new lease. Our team will be available to discuss these choices with you.
Regrettably, it is not possible to fully enjoy the advantages of a novated lease without proper arrangement and management of the lease. However, we encourage you to contact us to discuss the optimal outcome for your situation.