FAQs - EV
Electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs)
Novated Leasing can save you thousands in GST and income tax and recent legislative changes mean that you can now save even more. Find out more below.
Why should I novate an electric vehicle?
Novated Leasing is an effective way to get into a car, as it bundles your finance and budgeted running costs into one easy payment on payday. This allows you to pay some of the costs from your pre-tax salary, reducing the GST and income tax you pay.
While Fringe Benefits Tax (FBT) does apply to a Novated Lease, even when this is considered, a lease can still be a great way you could save thousands on your car.
The good news is that the Federal Government has recently introduced a change (the Treasury Laws Amendment also known as Electric Car Discount Act 2022) which applies to the leasing of certain zero or low-carbon emission cars including, battery electric, hydrogen fuel cell, and plug-in hybrids. This change means that these types of cars, leased after 1 July 2022, are now FBT-exempt, making a Novated Lease an even more financially attractive option.
More information regarding the Act can be found here.
Which cars will be FBT-exempt?
Zero or low-carbon emission cars including:
- Battery electric cars
- Hydrogen fuel cell electric cars
- Plug-in hybrid electric cars (only exempt until 1 April 2025)
These cars also need to:
- be considered a 'car' (according to the ATO)
- A passenger vehicle under 1 Tonne (e.g. sedan or station wagon) that carries fewer than nine passengers
- A goods vehicle under 1 Tonne (e.g. ute) with a carrying capacity of less than one tonne
- have been registered for the first time on or after 1 July 2022
- used by a current employee or their family members
- under the luxury car tax (LCT) threshold (or, in the case of a used car, never been subject to LCT)
Further information can be found on the ATO's Electric Cars Exemption Guide >
When does the FBT exemption take effect? And, when does it end?
At this stage, the FBT exemption is available for 3 years on eligible cars leased from 1 July 2022.
A review of the legislation will be undertaken in 3 years to determine if this tax concession will continue.
However, plug-in hybrid electric vehicles will not be eligible from 1 April 2025.
What happens to my Novated Lease when the current exemption ends?
Plug-in hybrid cars
The FBT exemption on plug-in hybrid cars will cease on 1 April 2025.
However, leasing arrangements made between 1 July 2022 and 1 April 2025, will be honoured for the term of the lease, even if the lease term ends after 1 April 2025. An FBT exemption will not apply to these cars if they are refinanced or if you extend the lease after
that date.
Battery and hydrogen fuel cell electric cars
The FBT exemption for battery electric and hydrogen fuel cell electric cars will be reviewed after three years and a decision made on whether this tax concession will be continued and the government will provide an update when that review begins.
Does the FBT exemption apply to all zero or low‑carbon emission cars?
No. The FBT exemption only applies to eligible zero or low carbon emission cars with a new car retail value below the luxury car tax threshold of $91,387 (current as at 2024–25; subject to change annually). Or, in the case of used vehicles, only where the previous owner/s didn’t pay luxury car tax.
FBT exemption only applies to eligible zero or low carbon emission cars.
Are used cars eligible?
The FBT exemption applies to eligible used cars as long as the car:
- was owned and available for use for the first time on or after 1 July 2022; and,
- has never been subject to luxury car tax ($91,387 as per the 2024–25 threshold; subject to change annually).
On used vehicles, it is your responsibility (as the novated lessee) to ensure that these ATO requirements are met.
What car expenses are included on an EV or PHEV Novated Lease?
A Novated Lease bundles your car finance with budgeted running costs. Budgeted running costs include: annual registration, scheduled servicing, maintenance, comprehensive insurance, tyres and 24/7 roadside assistance and accident management.
Can I package the electricity charging cost on an EV or PHEV?
Electricity charging costs can be claimed at 4.2 cents per kilometre travelled and we can build this into your Novated Lease running costs budget based on your annual estimated kilometres.
Unfortunately, you can't claim electricity charging costs on plug-in hybrids but, you can include a a budget for petrol/diesel fuel in your Novated Lease running cost and claim those costs.
How does this affect my reportable income?
While you can take advantage of the FBT exemption, the value of the exemption must still be reported as a Reportable Fringe Benefit Amount (RFBA) on your annual Payment Summary. As such, this may have an impact on other government tax benefits you receive, such as:
- Medicare levy surcharge
- Private health insurance rebate
- Div 293 tax for superannuation contributions
- Eligibility for family assistance payments Child support
- Amounts you pay against your Fee-Help debt
You should seek independent financial advice for further information.
What are the impacts on my employer?
Your employer will still be required to report the value of the Fringe Benefit as part of their usual FBT reporting to the ATO.
Does the ATO Car Limit still apply to my employer?
The ATO Car Limit is still applicable to your Novated Lease as this is not related to FBT. Where your employer is a tax-paying entity, they can usually claim the cost of employee wages. However, where the cost of a wage is foregone (as is the case for a Novated Lease), your employer would normally be able to claim the lease instalments paid under a Novated Lease.
Where the car value exceeds the ATO Car Limit ($69,674 as of 2024–25; subject to change annually) for tax purposes, your employer won’t be able to claim the finance portion of the lease payment. They’ll only be able to claim the interest and tax depreciation of the car. This results in your employer being unable to claim the full tax deduction on the finance portion. As your employer would essentially be out of pocket for any Novated Lease that is over the ‘Car Limit’, a luxury car charge will be applied to your lease to offset this and remitted back to your employer.
Are there any other concessions on duties and charges available?
There may be a range of other concessions (e.g. registration discounts) or charges (e.g. road user) depending on the Australian state or territory in which your car is registered. Please check with your relevant state road traffic authority for more information.
I have an eligible car on order. Can I take advantage of this FBT exemption when the car is delivered?
Absolutely. If your car is eligible (based on the abovementioned eligibility criteria) then we will automatically make the necessary adjustments for you and provide you with updated documents.
As the Act has only recently passed, we’re in the process of making the necessary changes to our systems. As soon as our systems have been updated, we’ll contact all customers with an eligible car, whether already delivered or on order. In the meantime, we thank you for your patience.
I have an existing Novated Lease on an eligible car. How do I take advantage of the FBT exemption?
As soon as our systems have been updated to apply the FBT exemption, we’ll automatically recalculate your lease, adjust your post-tax contributions and advise you of the changes.
We’ll then work closely with your employer and their payroll department to make the necessary adjustments to your salary deductions, ensuring you take advantage of the FBT exemption, backdated to 1 July 2022 or the start date of your lease, whichever is the latter.