Fringe Benefits Tax has been around as long as novated leasing. It’s something that causes confusion and frustration due to its complexity, and often scares people away from the financial benefits of salary packaging. Put simply, in a novated lease you’ll pay 20% of the car’s purchase price as FBT each year. Even with this added expense, most people still save money with a novated lease compared to buying a car with cash.
In 2022 everything changed for FBT and electric cars. The Federal Government introduced the Electric Car Discount bill which provides an exemption on FBT for electric vehicles (EVs) and plug-in hybrid vehicles (PHEVs). This means you do not need to pay 20% of the purchase price each year as FBT if you purchase an EV or PHEV in your novated lease. The FBT is still reportable (which may have implications for some people), but it’s no longer a financial cost.
This makes electric cars accessible to more people via novated leasing because the monthly cost is significantly reduced. As a result, demand for electric vehicles has dramatically increased.
You don’t need to be an expert in FBT to understand the benefits. Just download a copy of the 2024 Car Leasing Guide and look through the pages to compare one of several models that are available as petrol or electric. You’ll see a significant difference in the purchase price with a small difference in monthly rental. Or compare the monthly rental of a petrol powered car and an electric car with a similar purchase price.
