Benefits of an electric vehicle and the EV Discount
10/14/2024 12:04 AM
The Australian Government has exempted electric cars from paying the fringe benefits tax – here’s how you can reap the rewards.
Sponsored by Oly
Electric vehicles are really taking off in Australia, accounting for eight per cent of new motor vehicles sold this year. That’s not surprising amid soaring petrol prices, as electric vehicles are cost-effective to run and more environmentally friendly.
And thanks to the government's EV Discount, there’s never been a better time for Australians to get behind the wheel of an eligible electric car.
What is the EV Discount?
The Australian Government’s EV Discount initiative is a fringe benefits tax (FBT) exemption that is only available with a novated lease on an eligible electric or plug-in hybrid car. To be eligible, cars need to be valued below the luxury car tax threshold, $91,387 for FY24/25.
The government usually charges your employer FBT when they provide you with benefits aside from money. On vehicles, it’s a 47 per cent tax on the personal-use portion of your car – an expense that employers can pass on to you. But not if you take advantage of the EV Discount.
With the Government's FBT exemption on eligible electric vehicles, you can pay for your lease entirely with your pre-tax salary, reducing your taxable income and saving you thousands of dollars
RELATED: What is a novated lease? Read our explainer here
Which cars are eligible for the EV Discount?
Tesla might make some of the most popular electric vehicles, but they're not the only eligible EVs available in the market – there's a wide variety of affordable options. There are great EV models from BYD, GWM, Hyundai, Kia, MG, Polestar, Volvo and others – as long as they’re valued under $91,387 as of July 1, 2024, you could save money with a novated lease.
If you're in the market for a hybrid, a great range of plug-in hybrid electric vehicles (PHEVs) are available. The Mitsubishi Outlander remains Australia’s top-selling PHEV, ahead of its smaller Eclipse Cross sibling. Meanwhile, the Mazda CX-60, Volvo XC60 and BYD Sealion 6 PHEVs are also popular models.
However, the FBT exemption on PHEVs ends on April 1, 2025. After that, only fully electric cars will be eligible for the EV Discount.
The good news is, if you commence a novated lease on a PHEV before the April 1, 2025 date, the exemption still applies for the entire lease period.
So, if you’ve got your eye on a plug-in hybrid or an EV, now is the time to get behind the wheel and make the most of the EV Discount with a novated lease.
How much could you save with the EV Discount?
The EV Discount is like a big thank you from the government for choosing an electric car. And with a novated lease, you could save thousands in tax.
For example, if you earn $90,000 a year and are considering buying a new Tesla Model Y, planning to drive it about 15,000km each year for five years, you could end up saving over $20,000 more than if you were to purchase a petrol car like the Mazda CX-5.
Thanks to Oly and the EV Discount, you could drive away in the Tesla Model Y and pay a similar amount every week to the petrol-powered Mazda CX-5^.
The EV Discount isn't the only benefit of a novated lease. You could also skip thousands of dollars in upfront GST on the drive-away price of the car. And avoid paying GST on car-related expenses by bundling running costs including charging, insurance, rego and servicing into your one regular lease payment.
How can Oly help me score an EV?
Oly has connections with a huge network of car dealers and manufacturers, which means getting behind the wheel of your dream electric car is EV-peasy.
From sourcing the car, and arranging finance to sorting your insurance. Plus, you can manage everything on the go using Oly's handy app.
Oly is backed by one of Australia’s most trusted novated leasing providers, McMillan Shakespeare Group (MMS), with more than 35 years of experience in helping Australians get behind the wheel of a great new car.
Find out what you could save with Oly's easy-to-use electric vehicle calculator. Get a quote today!
Disclaimer
^ Displayed price is only available through a novated lease administered by Oly. Estimated costs have been determined based on the following assumptions: 1) The example assumes that the car is an eligible zero or low emissions vehicle, 2) The lease is an Oly fully maintained lease, 3) A 5-year lease term, 4) A residual value of 28.13% of the vehicle purchase price payable at the end of term, 5) Gross annual salary of $90,000, 6) An annual distance travelled of 15,000kms, 7) The value of the car at the first retail sale was below the luxury car tax threshold of $91,387 for fuel-efficient vehicles, 8) The car is first held and used on or after 1 July 2022 and 9) The vehicle is purchased in NSW. Additionally, the estimated annual operating costs including estimates of fuel/electricity, maintenance, four replacement tyres, registration, CTP and comprehensive insurance, roadside assistance, and fleet management fee have been calculated on a GST-exclusive basis on the assumption that your employer will be entitled to GST input tax credits and that they will pass on the benefit to you. GST is payable on your ECM contributions. State Stamp Duty rates apply. PAYG tax rates effective 1 July 2024 have been used. The indicative price quoted for the novated lease is based on vehicle quotations Oly has received on 1 June 2024 and does not include any optional extras. Any optional extras that you choose will affect the cost of the novated lease and residual value. The total amount saved is a comparison between a novated lease based on the assumptions outlined above and the purchase of a vehicle and payment of running and maintenance costs using post-tax earnings. The total amount saved is a comparison between a novated lease based on the assumptions outlined above and the purchase of a vehicle and payment of running and maintenance costs using post-tax earnings. Your individual circumstances have not been taken into account as this will affect the overall weekly cost amount and the benefits of a novated lease. Savings shown are indicative and reflect estimated tax savings over the full term of the lease. Actual savings will depend on personal circumstances and may vary depending on the vehicle model and price. Oly recommends that you seek independent financial and taxation advice.
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