When comparing list prices, electric vehicles (EVs) are still often more expensive than comparable combustion-powered vehicles. or signup to continue reading When it comes to novated leasing, however, it's a different ballgame – and EVs often come out ahead. That's because fringe benefits tax (FBT) currently isn't payable on new electric or plug-in hybrid vehicles if they're used by a current employee or their associates (such as family members) and fall under the luxury car tax (LCT) threshold.
The LCT threshold for so-called "fuel efficient vehicles" for the 2024/25 financial year is $91,387. . First, just what is a novated lease? Put simply, it's a three-way agreement between you, your employer, and a finance or leasing company that could reduce your tax obligations.
It's a form of salary sacrificing, with your vehicle payments deducted from your pay before taxes are deducted. Despite this, you're still allowed 100 per cent personal use of the vehicle, and you can even modify your car upfront and bundle the cost of accessories into the total cost of the vehicle. This fact also means you should skirt paying GST, as your employer can claim an input tax credit of up to $6191 before billing you.
Not only that, but novated lease payments include running costs such as insurance, servicing, fuelling or charging, tyres, and registration. Novated leasing usually reduces your tax obligations, but it's considered a fringe benefit. That means your employer has to pay FBT, which is c.
