The EV FBT exemption: how does it work and who’s eligible?

Electric vehicles (EVs) are becoming super popular thanks to a 2022 government tax exemption. (Read more here.)

2:10 minute read

Published on March 14, 2024

The benefits of a novated lease for small to medium business

Key takeaways

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With a novated lease, you can access the EV Discount and pay for an eligible electric car entirely with your before-tax salary.

Thanks to the EV Discount, a 5-year novated lease on an electric car could match the weekly cost of a regular petrol car worth $20k less.

The EV Discount is good for EVs and PHEVs (until April 2025) valued under $91,387 after July 1, 2024, and first held and used after 1 July 2022.

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What’s the EV Discount?

The EV Discount is like a financial high-five from the government for choosing an electric car – it's their way of saying, "Thanks for being a cool, eco-friendly driver!"

When you take out a novated lease for an eligible EV (i.e. EVs valued under $91,387 as of July 1, 2024, first held and used after 1 July 2022) you can pay for your electric car entirely with your pre-tax salary and not worry about fringe benefits tax. This means you could save a lot more money over the duration of your lease on an electric car, especially when compared to a petrol car!

How much could you save with the EV Discount?

You could literally save thousands on an electric car with a novated lease. Here’s how it works… let’s say your salary is $90,000 and you have your heart set on a Tesla 3, driving it 15,000 kms every year for five years. Now, even though the Tesla costs over $20,000 more than a regular petrol car like the Mazda CX-5, you could still pay a similar amount every week with a novated lease.^

What’s the FBT exemption?

The FBT exemption is a cool perk that means certain benefits handed to employees by their boss (like a novated lease), don’t get hit with fringe benefits tax. This makes these benefits more budget-friendly for employers and extra rewarding for employees. It's a win-win!

Which cars are eligible for the FBT exemption?

The FBT exemption is good for battery-electric cars (EVs) and plug-in hybrid electric vehicles (PHEVs) up to a total cost of $91,387. Keep in mind, plug-in hybrids will not be eligible for the incentive after 1 April 2025.

How can Oly help me save on an electric car?

Oly could help you get set up with a novated lease with one regular, automatic payment for all your car expenses. That means no bill-juggling and late payment fees (or fines when you forget to renew your rego!). Plus, you could have lower running costs over the duration of your lease.

And because Oly’s powered by McMillan Shakespeare Group (MMS), one of Australia’s largest and most trusted novated leasing providers, you could benefit from bigger buying power and over 35 years of experience to get a great deal on your electric car.

Keen to put the pedal down and rev up your savings on an EV?

Get your quote with Oly now

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 a 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 includes 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 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 novated lease offer is based on the assumption outlined in the comparison table and is an indicative cost approximation of the selected vehicle and model stated and the amounts may change at the time the novated lease quotation is completed and finalised. 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. The total amount saved is a comparison between a novated lease based on the assumption outlined above and the purchase of a vehicle and payment of running and maintenance costs using post-tax earnings. 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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