When evaluating listing costs, electrical autos (EVs) are nonetheless typically dearer than comparable combustion-powered autos.
In terms of novated leasing, nonetheless, it’s a special ballgame – and EVs typically come out forward.
That’s as a result of fringe advantages tax (FBT) presently 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 (reminiscent of relations) and fall below the luxurious automotive tax (LCT) threshold.
The LCT threshold for so-called “gas environment friendly autos” for the 2024/25 monetary yr is $91,387.
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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 might scale back your tax obligations.
It’s a type of wage sacrificing, together with your automobile 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 automobile, and you may even modify your automotive upfront and bundle the price of equipment into the full price of the automobile.
This truth 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 embrace operating prices reminiscent of insurance coverage, servicing, fuelling or charging, tyres, and registration.
Novated leasing often reduces your tax obligations, however it’s thought of a fringe profit. Meaning your employer has to pay FBT, which is charged at 47 per cent, with the taxable worth being 20 per cent of the automotive’s price.
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.
Under are figures based mostly on an individual in Victoria incomes $130,000 a yr and planning to journey 15,000km a yr with a lease time period of 5 years.
| MG ZS EV LR | Suzuki Ignis | |
|---|---|---|
| Automobile drive-away worth | $46,990 | $25,286 |
| Upfront GST payable on automobile worth | $4034.11 | $2140.44 |
| Weekly cost (incl. operating prices, GST) | $253.51 | $190.15 |
| Approx. weekly tax, GST financial savings | $110.25 | $43.47 |
| Internet price per week | $143.26 | $146.68 |
| Internet price over 5 years | $37,247.60 | $38,136.80 |
| Approx. saving over 5 years | $28,665.25 | $11,303.40 |
There are a number of extra issues to learn about novated leasing.
Lease funds are bundled with operating prices reminiscent of insurance coverage, servicing, fuelling or charging, tyres, and registration. Meaning the prices are a part of your wage sacrificed funds, boosting the tax profit.
You possibly can even modify your automotive upfront and embrace the associated fee within the general lease.
Lease durations 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 cost – which on a five-year lease is about 28 per cent of the automobile worth – and maintain the automotive.
Alternatively, you’ll be able to refinance the quantity or commerce within the automotive and commerce up into one other lease.
If you happen to change jobs, a novated lease could possibly be transferable in case your new employer is keen to take it on, in any other case you’ll must make lease funds immediately.
The Australian Authorities hasn’t supplied direct subsidies on the acquisition worth of EVs, and state incentive packages providing these have largely dried up.
Nonetheless, the Electrical Automotive Low cost does provide these eager about an EV (or a PHEV, no less than in the intervening time) an attractive choice.
Disclaimer: The knowledge on this web site is for normal functions solely and never an alternative choice to skilled monetary recommendation. CarExpert recommends looking for unbiased authorized, monetary, taxation or different recommendation distinctive to your particular person circumstances.