Key Highlights
- An electric car novated lease allows you to pay for your vehicle and its running costs using your pre-tax salary, significantly reducing your taxable income.
- Australian workers benefit from the Electric Car Discount and FBT exemptions for eligible electric vehicles under the luxury car tax threshold.
- You can save thousands annually on car finance and running costs, including registration, tyres, and comprehensive car insurance.
- Using an EV novated lease can offer tax savings of up to 57% compared to other purchase methods.
- Opting for a novated lease is a cost-effective way to drive a green electric vehicle while managing upfront expenses efficiently.
Introduction
Switching to an electric car in Australia is now easier and more attractive than before. You can get real savings when you use a novated lease. With this setup, you may have less tax to pay and still drive an eco-friendly vehicle at the same time. The Australian government has put new ideas in place, like the electric vehicle discount, that help make owning an electric vehicle easier for everyone. If you want to get a new EV or are just looking at your options to help lower costs, trying a novated lease might change how you think about car ownership. Below, you will see how this process works and why so many people now pick this way to get a car.
Understanding Electric Car Novated Leases in Australia
In 2022, the Australian government brought in the Electric Car Discount. This rule makes some EVs free from fringe benefits tax (FBT) if the price is under the luxury car tax threshold. You save more money when you buy and use your car. Plus, you help the planet by choosing a cleaner ride with an electric car.
What is a novated lease, and how does it work?
An electric car novated lease is an agreement between you, your employer, and a salary packaging provider or a financier. With a novated lease, you can lease a car using some of your pay before tax. Your employer will take out the lease payments from your pay, so your taxable income goes down. This means you may pay less in taxes.
With this setup, you pay for all your car expenses in one payment. This includes the cost of the lease, servicing, and running your car. It is easier because the payments all stay together. The lease term can be from 1 to 5 years. This helps you pick the option that works best for you.
A novated lease agreement gives you direct convenience when you choose your prefferd terms when leasing with https://blacktieleasing.com/. You do not need to handle each car cost, including car payments, by yourself. There will be one payment for it all, covering repayments, registration, and insurance, too. If you want an electric vehicle or a regular car, the novated lease helps make your money go further and can lower the stress of owning a car.
Why electric vehicles are gaining popularity in Australia
Australia has seen a big rise in people choosing an electric car because of long-range benefits from new technology, and it is now easier to get one. Some states, like NSW, now have more public chargers. This helps with EV infrastructure and makes people feel less worried about the range.
The price of battery EVs is now lower, too. Many people in Australia see them as a good choice because of the electric car discount and other government incentives. These savings make owning an electric vehicle much more doable for most Australians who drive an average of 15,000 kilometres per year.
At the same time, more people care about the environment and how they travel. Australians now want to lower their carbon footprint. Local rules encourage them to get EVs instead of fuel-run cars. Plus, running costs are lower and there are novated lease options with FBT exemptions. Because of all this, EVs could soon be the main type of car on the roads in Australia.
The Novated Lease Process Explained
The novated lease process makes it easy to get an electric vehicle (EV). Your novated lease provider, like Leaselab, works with you to find a vehicle option that fits your needs. They help you pick the EV, do the paperwork, and set up the lease.
After you decide on the EV, your employer will set up a salary-sacrifice deal. This means your lease payments come out of your pay before tax. With this choice, all costs go into one simple payment. It helps you see the full amount you will spend and can bring you good tax savings. Next, let’s go over the main steps for a novated lease with an electric vehicle.
Steps to organise your electric car novated lease
Arranging an EV novated lease is easy to do. You can look at these simple steps to help guide you:
- Calculate your savings: Use a novated lease calculator to figure out how much you could save on tax and what your running costs may be.
- Select your provider: Work with a novated lease provider who will give you the help you need.
- Choose your EV: Pick an EV from a dealer on the approved list and make sure the car gets the FBT exemption.
- Finalise delivery: To finish, you and your boss talk to the provider to set up the dealer delivery and sort out all the paperwork.
These steps can help you get through the novated lease process. You can get tax savings, enjoy simple EV ownership, and not worry about stress.
What’s included in a typical lease package?
Most novated lease packages cover all the help you need for your car expenses. This makes the way you manage money very easy. It helps you enjoy your car with no worries. You will usually get these things:
- Running costs: This includes petrol for your car or charging costs for an electric one.
- Comprehensive car insurance: It protects you if there is an accident or any damage.
- Registration: The yearly renewals for your car registration are included in your lease payments.
- Repairs and tyres: All services like repairs, new tyres, and any car check-ups are already in the package.
These novated lease packages take the stress out of having a car. They make it easy to use, less costly, and good for you.
Cost Savings and Real-World Examples
With an electric car novated lease, such as a BYD model, you can get big savings. You do not pay GST on the buying price, and you also save on some running costs. There are good FBT exemptions for cars under the luxury car tax threshold.
If you pick a Tesla Model 3 as your car, you could get tax savings of £13,300 each year on a 4-year lease. The full cost of the lease, your insurance, and running costs could be lower than using your own money to buy the car. Let’s take a closer look at how much you can save and what makes it better.
How much can you save with an electric car novated lease?
When you go with an EV novated lease, you can get big tax savings. Here is a look at the cost of a Tesla Model 3 with a few ways to buy:
| Purchase Method | Total Cost (4 Years) | Tax Savings (£) |
| Novated Lease | £75,854 | £13,300 annually |
| Outright Purchase | £107,420 | N/A |
| Car Loan | £125,167 | N/A |
This table shows how much you could save with a novated lease and how pre-tax payments help you pay less in the long run.
Comparing costs: electric car novated lease vs. buying outright
Getting an electric car with an exempt novated lease gives you some big benefits compared to just buying the car. You do not have to worry about luxury car tax thresholds, and you can use FBT exemptions, which you will not get when you buy the car straight out.
Also, a lease brings together all your running costs, like insurance and residual value, into one package. This helps make your budget easy to manage. When you buy a car, you have to cover things like maintenance and servicing on your own.
In the end, instead of paying a big lump sum or handling high loan repayments each month, a lease comes with lower monthly bills. This can help you and other people save money for years.
Conclusion
In short, a novated lease on an electric car is a simple and cost-saving way to drive a new car. You can get help with your taxes and cut your running costs, too. Many Australians are now looking at electric cars because they are good for the planet and can save money over time. If you want to know more about novated leasing, it is important to learn about all the details. The flexibility and savings from this kind of lease can really help with how much you pay for transport. If you are thinking about getting an electric vehicle, now is a good time to see how a novated lease fits your needs. If you want help, you can always reach out. You can get a free consultation on how to get the most out of your electric car novated lease.
Frequently Asked Questions
What happens at the end of an electric car novated lease?
At the end of your lease, you have a few choices with Vehicle Solutions Australia. You can pay the residual value and own the car at the end of your lease. You could also extend your lease or choose to get a different car. This makes sure the process fits what you need as things change.
Can I include charging equipment and running costs in my lease?
Yes, you can have charging equipment and the main running costs as part of the novated lease package. This will also cover things like EV accessories, registration, and other costs. It makes for an easy ownership experience when you get a novated lease.
Is insurance included in a novated lease?
Yes, in Australia, a novated lease usually includes comprehensive car insurance. This insurance helps with repairs, accidents, and other important car expenses. It makes the whole process easy and saves money for people using a novated lease.
What if I change jobs during my lease term?
If your job changes, your novated lease will still stay in place. You need to talk with your salary packaging provider or financier. This helps you set up payments with them, so the novated lease keeps going.
Are there any disadvantages to leasing an electric car via a novated lease?
A novated lease can give you some good benefits, but you need to look at your financial situation first, including your income tax. There may be some issues you face with taxation or with the deductions left to pay. So, it’s important to think about your own needs and situation before you decide to go ahead with a novated lease.
