Each financial year, the Australian Taxation Office (ATO) revises the thresholds for the Luxury Car Tax (LCT). These changes are of significant interest to car buyers, especially those considering an electric vehicle in a novated lease, because the FBT Exemption only applies to cars that are priced under the LCT threshold for fuel-efficient vehicles.
The LCT limit for fuel-efficient increased to $91,387 for FY24/25. It’s only a small increase though according to Frank Agostino, CEO at Paywise, it’s a timely adjustment that helps align the tax policy with inflationary trends and the evolving pricing landscape of the vehicle market.
“At Paywise, we’ve observed a significant shift towards electric vehicle novated leases following the government’s introduction of the Fringe Benefits Tax exemption for electric vehicles,” explained Agostino.
“This policy has proven to be a potent incentive, encouraging a broader adoption of EVs, which aligns with our commitment to promoting sustainable transportation options. The removal of the FBT on EVs not only makes these vehicles more financially accessible but also serves as a critical step towards reducing carbon emissions.”
“I firmly believe that the government should continue to responsibly incentivise Australians to transition to electric vehicles. Maintaining and enhancing incentives like the FBT exemption for EVs and Plugin Hybrids (PHEVs) is arguably the most effective method to accelerate this shift. Such policies not only support environmental goals but also make economic sense for consumers, enhancing the attractiveness of novated leasing as a pathway to vehicle ownership in an environmentally conscious era.”
“We at Paywise remain dedicated to guiding our clients through these beneficial changes, ensuring they are well-informed and positioned to take advantage of the evolving vehicle taxation landscape.”
There are a number of EVs that are eligible for the FBT Exemption under the new LCT threshold for FY24/25. Here’s a list of the luxury novated lease options that are close to the limit.
- BMW i4
- BMW iX3
- Hyundai IONIQ 5 EPIQ
- Hyundai IONIQ 6 EPIQ
- Kia EV6 GT-Line
- Lexus UX
- Mercedes-Benz EQA
- Mercedes-Benz EQB
- Polestar 4 Long Range
- Tesla Model 3 Performance
- Tesla Model Y Performance
- Volvo C40 Twin Recharge
- Volvo XC40 Twin Pure
For more information contact the team at Paywise.
