In the world of vehicle purchasing, electric vehicles (EVs) typically have higher list prices compared to traditional gasoline cars. However, when considering novated leasing, the narrative shifts in favor of EVs. This financial arrangement allows individuals to lease a vehicle through an agreement involving their employer and a leasing company, potentially leading to substantial tax savings.
One significant advantage of novated leasing for electric and plug-in hybrid vehicles is the exemption from fringe benefits tax (FBT). To qualify, these vehicles must be used by current employees and fall under the luxury car tax (LCT) threshold, which for the 2024/25 fiscal year is set at $91,387. This tax exemption makes EVs more attractive options in a novated lease compared to their combustion counterparts.
Novated leases allow for comprehensive cost management. Monthly payments can encompass not only the vehicle costs but also running expenses such as charging, insurance, and maintenance. This approach facilitates budget-friendly planning, especially for those aiming to reduce their taxable income.
In a practical example, an MG ZS EV Long Range can prove cheaper over five years than a Suzuki Ignis, despite the initial price difference.
Moreover, if you change jobs, the lease may be transferable, depending on the employer. The growing appeal of electric vehicles is evident, especially when salary sacrificing can lower overall costs while offering employee benefits.
Maximizing Your Savings with Novated Leasing for Electric Vehicles
In today’s increasingly eco-conscious world, electric vehicles (EVs) not only contribute to a sustainable future but also offer financial benefits through novated leasing. If you’re considering an EV or are already looking into this leasing arrangement, here are some helpful tips, life hacks, and interesting facts to enhance your experience.
1. Understand Your Tax Benefits:
Novated leasing can lead to significant tax savings. By salary sacrificing your lease payments, you effectively decrease your taxable income. This reduction can be particularly advantageous for higher earners seeking to minimize their tax burden. Moreover, the exemption from fringe benefits tax (FBT) for eligible EVs means you keep more money in your pocket.
2. Calculate Total Cost of Ownership:
When evaluating the overall cost of an EV under a novated lease, it’s crucial to consider the total cost of ownership. This includes not only lease payments but also expenses such as charging costs, maintenance, and insurance. With these factors combined, you may find that an electric vehicle is a more affordable choice than it initially appears.
3. Leverage Employer Policies:
If you’re contemplating a switch to an electric vehicle, check with your employer about their novated leasing policy. Some companies offer specific incentives for EVs or might provide additional support in managing the leasing process. Knowledge of your employer’s stance can help you navigate the options available.
4. Opt for a Comprehensive Lease Package:
Ensure that your novated lease offers a comprehensive package that includes maintenance and insurance. This approach not only simplifies budgeting but also avoids unexpected expenses that could disrupt your financial planning.
5. Compare Different EV Models:
When selecting your EV, it’s wise to compare various models and their long-term costs. For instance, while an MG ZS EV Long Range might come at a higher initial price, over a five-year period, it could end up being cheaper than alternatives like the Suzuki Ignis when considered under a novated lease.
Interesting Fact:
Did you know that the interest rates on novated leases can sometimes be lower than traditional car loans? This is due to the residual value of the vehicle and the potential tax benefits associated with novated leasing.
6. Stay Informed About Luxury Car Tax Thresholds:
The luxury car tax (LCT) threshold can change. For the 2024/25 year, it’s set at $91,387 for eligible vehicles. Staying informed about these thresholds can help you make better financial decisions regarding vehicle selection.
7. Plan for Job Mobility:
With the flexibility of novated leasing, if you change jobs, you might have the opportunity to transfer your lease, depending on your employer’s policy. This adaptability can make EV leasing less risky than traditional financing options, adding to the appeal of going electric.
Elevate your financial strategy by exploring the benefits of novated leasing for electric vehicles. For comprehensive resources and more information, visit ABC News. These insights will empower you to make informed decisions that can enhance both your financial well-being and your contribution to a sustainable future.