A win for the lobby group the Electric Vehicle Council of Australia and for the environment, the Australian Government has recently proposed to remove the fringe benefits tax (FBT) on eligible electric cars. This is also certainly good news for Australian motorists looking to do their bit for the planet by getting behind the wheel of a new EV.
EVs are becoming increasingly popular around the world as people look for more sustainable transport options, and Australia is poised to take advantage of this growing market. With the cost of EVs coming down and a range of attractive government incentives on offer, there has never been a better time to switch to an electric car.
The removal of FBT will not only make EVs more affordable for employees but because employers can still claim the value of the exempted FBT when calculating an employee's reportable fringe benefits amount it will amplify the savings for businesses.
What are Fringe Benefits?
Fringe benefits are a key component of any employee's compensation package. By offering fringe benefits, employers are able to attract and retain the best talent. Fringe benefits also help to create a positive work environment, which can boost morale and productivity.
The most common fringe benefits include a leased vehicle for personal use (under a ‘novated lease’ arrangement), private health insurance, discounted loans and childcare costs.
What is Fringe Benefits Tax?
Fringe benefits tax (FBT) is a levy paid on certain non-cash benefits provided to employees by their employers. These benefits usually include things like company vehicles and discounted loans.
FBT was first introduced in Australia in the 1980s by the Hawke government. It was designed to help level the playing field for businesses, as some companies were able to use non-cash benefits to pay less tax than their competitors.
Levied on employers, but often borne by employees, FBT is calculated as a percentage of the value of the fringe benefit provided and paid annually. Employees with novated leases can reduce their FBT liability by topping up their salary sacrifice contributions
Increasing EV uptake
The Australian Government's decision to remove FBT on EVs is a major step towards encouraging more motorists to switch to electric, and in doing so, reduce emissions.
As more private EVs hit the road, there will be a positive knock-on effect on the transport and energy sectors. Currently, Australia lags behind many comparable nations in its rate of hybrid electric vehicle and BEV adoption, and the Australian Government is hoping that by reducing barriers for potential EV drivers, such as removing FBT, the nation can catch up.
Hopefully one day soon the majority of vehicles on our roads will have an electric motor and this will lead to dramatic improvements in environmental sustainability.
How do novated leases work?
Understanding how a novated lease works can prove tricky. Put simply, a novated lease is when an employee leases a vehicle from a car dealer and then enters into a salary sacrifice arrangement with their employer.
The employer pays for the leased vehicle out of the employee's pre-tax income and in return, the employee receives increased take-home pay. Under the government's proposed scheme, employees will be able to lease new EVs with no FBT payable on the cost of the vehicle.
Can you get a novated lease for an electric car?
Now, you might be wondering, "can I get a Tesla on a novated lease?" or “can I take out a novated lease on a plug-in hybrid?” The good news is that you certainly can, with many Australian car dealerships offering their own EV leasing packages. These deals are often very competitively priced, with novated lease deals on EVs often coming in at a similar or even lower monthly cost than traditional petrol vehicles!
The beauty of novated leasing is that it allows drivers to enjoy all the benefits of owning a car without having to deal with any of the costs. For instance, with a novated lease, expenses like registration, insurance and maintenance are all taken care of by the employer. And the fact that you will be saving on fuel costs when you take out an EV novated lease will also help to save you money in the long run.
Getting a new EV may seem out of reach for many Australians, but with a novated lease and other government incentives, it is now easier than ever to make the switch to electric. So, if you've been wondering, "can you salary sacrifice an electric car in Australia?" then the answer is yes – and you can enjoy savings, benefits and low running costs in the process!
Is it worth novating an electric car?
If you are interested in buying an electric vehicle, a novated lease could be the perfect option for you. Not only will you be able to save on fuel, registration and maintenance costs, but you will also be eligible for various government incentives that can help to make the purchase price of your new EV more affordable. Furthermore, by reducing your pre-tax income through salary sacrificing, you effectively pay less tax on your income, helping you to save even more.
Paying tax is a key component of any working adult's life, so if you can save money on your taxes while getting behind the wheel of a brand new electric vehicle, it is definitely worth considering a novated lease! And the fact that the Federal government is proposing to scrap the FBT on new low-emission vehicles to increase their uptake and drive the electric vehicle industry forward is another great reason to take up this electric car discount and get a new EV today.
Hybrid vehicles and fully electric cars are becoming increasingly popular in Australia, and with good reason. Not only are electric vehicles better for the environment, but they can also help to reduce your running costs, allowing you to save money in the long term. If you are interested in purchasing an electric car, a novated lease is a great way to make the switch to electric while also reducing your taxes and enjoying a range of other benefits. So, if you are ready to enjoy all the benefits of EV ownership, it's definitely worth considering a novated lease electric car.
Whether you're looking at hydrogen fuel cell cars, battery electric vehicles or hybrid electric vehicles, we can help you here at Driva find the right electric car finance option for your needs and budget. Contact us today to learn more about our novated leases and you could be driving a brand new electric car in no time at all!
Here at Driva, we believe that electric vehicles are the future of sustainable transportation. However, we also understand that the upfront cost of an EV can be prohibitive for many people. That's why we've made it our mission to provide affordable financing options for EV buyers. In just two minutes, we can give you customised, fixed-rate car loan options without any hidden fees. So, if you're looking to make the switch to electric and want an easy way to pay for your new EV, get in touch with our specialist team today.