Novated leasing has long been a popular and tax-effective way for Australians to finance a new car. But since the introduction of the Electric Car Discount Bill in 2022, which provides a Fringe Benefits Tax (FBT) exemption for electric vehicles (EVs), novated leasing has become even more attractive—especially for those considering the switch to an EV.
Why Choose Novated Leasing?
A novated lease allows employees to lease a car using their pre-tax income, effectively reducing their taxable income and offering potential savings. It’s a three-way agreement between you, your employer, and a leasing company. Payments are deducted directly from your salary, making the process seamless and hassle-free.
One of the biggest advantages? Savings. Since payments are made from pre-tax income, you’ll likely see more money in your pocket each month compared to buying a car outright or using traditional finance options. Plus, GST is not charged on the vehicle purchase price, adding another layer of savings.
The FBT Exemption—A Game Changer for EVs
The introduction of the FBT exemption has significantly boosted the popularity of novated leasing for electric vehicles. This exemption applies to eligible EVs, eliminating a major cost associated with novated leasing. Without FBT, the overall lease cost is drastically reduced, making EVs a financially sound choice.
To illustrate, consider the Peugeot 308 petrol and its electric counterpart, the e-308. While the petrol model has a lower upfront cost, the novated lease for the e-308 comes out cheaper on a fortnightly basis because of the FBT exemption. The result? An estimated saving of over $31,000 over five years for the EV lease compared to the petrol model#.
Rising Demand for EVs through Novated Leasing
The FBT exemption has sparked immense interest in both novated leasing and electric vehicles. Industry sources confirm that over 50% of new cars acquired through novated leases in 2024 were electric, and the demand continues to rise. With cost savings, reduced environmental impact, and government incentives, it’s easy to see why more Australians are making the switch.
EVs also offer lower running costs. A Hyundai Kona Electric, for instance, costs as little as $4.44 to travel 100 kilometres when charged at home using grid electricity, compared to $12.47 for its petrol variant. Factor in the tax savings from novated leasing, and the cost per kilometre drops even further.
Bundled Costs and Hassle-Free Driving
Another standout benefit of novated leasing is the all-inclusive monthly payment. This covers not only the lease but also fuel (or charging costs), insurance, registration, servicing, tyres, and even maintenance. It simplifies budgeting—no more scrambling for funds when it’s time for a major service or rego renewal.
And for those thinking about accessories, number plates, or even a public charging cable for their EV, these can also be bundled into the lease, spreading the cost over the lease term.
Ready to Make the Switch?
With the significant tax savings, the FBT exemption for EVs, and the ease of salary packaging, novated leasing is an incredibly smart and cost-effective way to drive a new car—especially if you’re eyeing an electric vehicle.
Curious about how much you could save? Get a novated lease quote today and see how affordable driving a new (and possibly electric) car can be. It might just feel like a pay rise!
Download the Fleet Auto News 2025 Novated Leasing Guide here.
