When evaluating listing costs, electrical autos (EVs) are nonetheless typically costlier than comparable combustion-powered autos.
In terms of novated leasing, nonetheless, it’s a distinct ballgame – and EVs typically come out forward.
That’s as a result of fringe advantages tax (FBT) at present isn’t payable on new electrical or plug-in hybrid autos in the event that they’re utilized by a present worker or their associates (similar to members of the family) and fall below the luxurious automobile tax (LCT) threshold.
The LCT threshold for so-called “gasoline environment friendly autos” for the 2024/25 monetary 12 months is $91,387.
100s of recent automobile offers can be found by way of CarExpert proper now. Get the consultants in your aspect and rating a terrific deal. Browse now.
First, simply what’s a novated lease?
Put merely, it’s a three-way settlement between you, your employer, and a finance or leasing firm that would scale back your tax obligations.
It’s a type of wage sacrificing, together with your car funds deducted out of your pay earlier than taxes are deducted. Regardless of this, you’re nonetheless allowed 100 per cent private use of the car, and you’ll even modify your automobile upfront and bundle the price of equipment into the entire value of the car.
This reality additionally means you need to skirt paying GST, as your employer can declare an enter tax credit score of as much as $6191 earlier than billing you.
Not solely that, however novated lease funds embody working prices similar to insurance coverage, servicing, fuelling or charging, tyres, and registration.
Novated leasing normally reduces your tax obligations, nevertheless it’s thought of a fringe profit. Which means your employer has to pay FBT, which is charged at 47 per cent, with the taxable worth being 20 per cent of the automobile’s value.
With the FBT not making use of to electrical autos, nonetheless, this makes them a extra interesting prospect for novated leases.
For instance, in response to Australian-owned and operated novated leasing supplier Oly, a MG ZS EV Lengthy Vary finally ends up costing much less to lease than a base Suzuki Ignis… regardless of the Suzuki having a drive-away worth round $20,000 lower than the MG.
Beneath are figures based mostly on an individual in Victoria incomes $130,000 a 12 months and planning to journey 15,000km a 12 months with a lease time period of 5 years.
There are a couple of extra issues to find out about novated leasing.
Lease funds are bundled with working prices similar to insurance coverage, servicing, fuelling or charging, tyres, and registration. Which means the prices are a part of your wage sacrificed funds, boosting the tax profit.
You’ll be able to even modify your automobile upfront and embody the associated fee within the total lease.
Lease intervals are sometimes between one and 5 years and have a predetermined anticipated annual mileage.
When you attain the top of the interval, you’ll be able to both pay the residual or balloon fee – which on a five-year lease is about 28 per cent of the car worth – and maintain the automobile.
Alternatively, you’ll be able to refinance the quantity or commerce within the automobile and commerce up into one other lease.
If you happen to change jobs, a novated lease may very well be transferable in case your new employer is prepared to take it on, in any other case you’ll must make lease funds immediately.
The Australian Authorities hasn’t provided direct subsidies on the acquisition worth of EVs, and state incentive applications providing these have largely dried up.
Nonetheless, the Electrical Automobile Low cost does provide these all in favour of an EV (or a PHEV, at the very least in the intervening time) an attractive possibility.
Disclaimer: The knowledge on this web site is for normal functions solely and never an alternative to skilled monetary recommendation. CarExpert recommends looking for impartial authorized, monetary, taxation or different recommendation distinctive to your particular person circumstances.