With the surge in popularity of electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs), the Australian government has introduced incentives to encourage their adoption. One of the key benefits for drivers is the Electric Vehicle (EV) Fringe Benefits Tax (FBT) exemption.
This exemption makes electric vehicles the most cost-effective choice for both businesses and employees who participate in novated leasing by eliminating FBT and saving thousands of dollars each year.
But what exactly does this mean, and how can it help you? This guide explores everything you need to know about the EV fringe benefits tax exemption and how it can benefit you, particularly through a novated lease arrangement. This article aims to explain the details of the exemption, as well as the benefits it could provide for you.
What Exactly is the EV FBT Exemption?
The EV FBT exemption is part of Australia’s commitment to lowering emissions and making EV ownership more accessible. Fringe Benefits Tax is a 47% tax on electric cars provided through a business for private use of the vehicle. This car fringe benefit tax usually applied when a vehicle provided by an employer is used for personal purposes.
However, under the exemption, certain EVs and PHEVs are exempt from this tax.
The exemption can apply to cars that meet the following criteria:
The car must be a zero or low-emission vehicle (according to the ATO)
The car must be held and used from 1st July 2022 or onwards
A current employee uses the car
The car’s retail price is below the luxury car tax threshold.
Because employees will be able to take the cars home overnight to experiment with home charging without incurring any FBT fees, it could allow managers of a large vehicle fleet to conduct more broad electric vehicle trials across their fleet. It also means that car manufacturers will be encouraged to supply more electric cars to Australia at lower prices.
How Can This FBT Exemption Benefit You?
Employees will save thousands of dollars in FBT, which will magnify the benefits of salary packaging an electric vehicle over a petrol or diesel car. According to the Electric Vehicle Council, a $50,000 model could be $2,000 cheaper thanks to the removal of the import tariff, and could save up to $9,000 a year for drivers with the removed FBT.
We’ve taken the liberty of writing up an example comparison with the acquisition of an electric car valued at $49,990. When purchasing this car outright, the running costs add up to a grand total cost of $70,360. However, the FBT-exempt novated lease option puts all running costs into the fortnightly lease payments, leading to a total cost of $58,727.
This means you would be saving $11,633 over the course of 5 years with a novated lease thanks to this electric car exemption.
The amount of savings you can get will increase as the value of the vehicle also increases - up to the luxury car tax threshold - making it clear to see how much you could get out of this exemption.
This new financing option will give workers more savings than the typical statuary lease method used in many car financing businesses. This method involves including a flat rate of 20% of a work vehicle for personal use.
Electric Vehicles that Qualify for the FBT Exemption
This FBT exemption opens the door for many Australian workers to make the change to more fuel-efficient vehicles. Some of the most popular EVs that meet the exemption include:
Tesla Model 3: Known for its impressive range and cutting-edge technology, the Tesla Model 3 has been a popular choice among Australians looking to make the switch to electric. It’s a great fit for those wanting a premium, eco-friendly driving experience.
Hyundai Ioniq 5: Combining style and functionality, the Ioniq 5 has quickly become a favourite in the EV market. It’s spacious, high-tech, and perfectly suited for families or those needing extra cargo space.
MG ZS EV: This budget-friendly electric SUV offers great value for money, making it an attractive option for those new to EV ownership. Its affordability and practicality have made it a top choice in Australia.
BYD Atto 3: BYD has seriously impressed with their EV range, price, and innovative features. It’s an excellent option for those wanting something fresh and different on the electric car scene.
The complete list of eligible EVs and PHEVs are listed below:
Battery Electric Vehicles (BEV/EV)
Hatchbacks
BYD Dolphin (Dynamic, Premium, and Sport)
GWM ORA (Standard Range, Extended Range, Ultra Extended Range, and GT)
MG MG4 (Excite 51, Excite 64, Essence 64, Long Range 77, and XPOWER 320kW)
MINI Electric Hatch (Yours Edition and Resolute Edition)
Nissan Leaf (Standard and e+)
Sedans
BMW i4 eDrive35
BYD Seal (Dynamic, Premium, and Performance)
Hyundai Ioniq 6 (Dynamic, Techniq, and Epiq)
Polestar 2 (Standard Range Single Motor, Long Range Single Motor, and Long Range Dual Motor)
Tesla Model 3 (Rear-Wheel-Drive, AWD Long-Range, and AWD Performance)
Compact SUVs
BYD Atto 3 (Standard Range and Extended Range)
Hyundai Ioniq 5 (Dynamic, Techniq, and Epiq)
Hyundai Kona (Electric and Electric Premium)
Kia Niro (S and GT Line)
Mazda MX-30 Electric E35 Astina
MG ZS EV (Exite, Essence, and Long Range)
Renault Megane E-Tech
Volvo EX30 (Plus Pure Electric, Ultra Pure Electric, and Ultra Twin-Motor Pure Electric)
Medium & Large SUVs
BMW iX1 (eDrive20 and xDrive30)
Kia EV6 (Air, GT-Line, and GT-Line AWD)
Lexus UX300e (Luxury and Sports Luxury)
Peugeot e-2008 GT-100kW
Subaru Solterra (AWD and AWD Touring)
Tesla Model Y (Rear-Wheel-Drive, AWD Long-Range, and AWD Performance)
Toyota bZ4X (2WD and AWD)
Volvo C40 (Recharge Pure Electric and Ultimate Twin Pure Electric)
Volvo XC40 (Recharge Plus Single Motor and Rechage Ultimate Twin Motor)
Plug-In Hybrid Electric Vehicles (PHEV)
This FBT exemption for PHEV ends on 1 April 2025 so if you are considering a PHEV paid 100% pre-tax you will need to be in the car before this date so order now!
Compact SUVs & Hatchbacks
MG HS PHEV Plus (Excite and Essence)
Mini Countryman PHEV (Yours Edition and Untamed Edition)
Peugeot 308 GT PHEV
Medium Sized SUVs
Mazda CX60 P50e (Evolve, GT, and Azami)
Mitsubishi Eclipse Cross PHEV (ES, Aspire, Exceed)
Peugeot 3008 GT Sport Plug-In Hybrid
Large SUV & 7-Seat vehicles
Kia Sorento PHEV GT-Line (7 seats)
Mazda CX80 PHEV (Touring, GT, and Azami) (7 seats)
Mitsubishi Outlander PHEV (ES and Aspire) (5 seats)
Mitsubishi Outlander Exceed PHEV (AWD and Tourer) (7 seats)
Dual Cab Utility
BYD Shark 6 Premium Dual Cab
Why Consider a Novated Lease for Your EV?
Novated leasing is one of the most cost-effective ways to finance an electric vehicle, especially when paired with the FBT exemption.
Under this arrangement, your lease payments are deducted from your pre-tax income, reducing your taxable salary and giving you more take-home pay. This setup makes novated leasing a tax-effective solution for EV ownership.
Additionally, novated leases often come with all-inclusive packages that cover vehicle maintenance, insurance, and registration. This convenience saves you from the hassle of dealing with multiple bills, simplifying the car ownership experience.
When combined with the lower running costs of electric vehicles and plug-in hybrid vehicles, a novated lease becomes an even more attractive option for a low emissions vehicle.
Why Choose Easi for Your EV Novated Lease?
Easi is a leader in novated leasing for electric and hybrid vehicles in Australia. With a deep understanding of the EV market, Easi offers tailored leasing packages designed to maximise your savings and make the transition to electric driving as seamless as possible.
Our team provides comprehensive support throughout the leasing process, from choosing the right vehicle to managing your lease paperwork. We are committed to helping Australians access the latest in electric vehicle technology while enjoying significant financial benefits.
Fuel Efficient Vehicles with a Difference, Thanks to Easi
With the massive range of eligible electric car options, there is no better time to get a novated lease than now. At Easi, we use our extensive knowledge and experience to give you the most savings possible, while avoiding minor infrequent and irregular payments thanks to a detailed plan.
To see how novated leases can create massive savings for you try our novated lease calculator or contact the Easi team today!
