There’s an EV revolution going on in Australia, with the Federal Government’s Electric Car (EV) Discount helping to drive significant uptake of zero and low-emission vehicles.

The discount, which includes an exemption of paying Fringe Benefits Tax (FBT) on eligible electric vehicles (EVs), became law in December 2022, and is aimed at driving further uptake of EVs as well as encouraging car manufacturers to import and supply more affordable electric models in Australia.

The FBT exemption only applies to the personal use of electric cars operated by businesses – or financed under a novated lease.

As one of Australia’s leading novated leasing providers, we’re all about supporting our customers to take advantage of the FBT exemptions while minimising their environmental impact.

The FBT Exemption Explained

The Electric Car Discount applies to fringe benefits provided on or after 1 July 2022 for eligible zero or low-emission vehicles that are held and used on or after 1 July 2022. It includes an exemption to the requirement to pay fringe benefits tax (FBT) on zero or low-emission vehicles that fall below the luxury car tax threshold of $91,387 for low-emission vehicles.

These include battery electric vehicles and hydrogen fuel cell electric vehicles, as long as the vehicle is first held and used from 1 July 2022.

Plug-in hybrid electric vehicles (PHEVs) are also eligible up until 1 April 2025. From that date, those on pre-existing leases are still entitled to the FBT exemption up until the end of their lease, so long as a commitment is made before 1 April 2025.

The FBT exemption only applies to the personal use of electric cars operated by businesses – or financed under a novated lease.

This means that a novated lease on an EV differs from that of a fuel-powered vehicle, because there is no post-tax component to deductions. Ultimately, as stated by Federal Treasurer Jim Chalmers when he introduced the related Bill to Parliament in 2022, “the cost to employees of entering into salary sacrificing arrangements in order to lease an eligible electric car will now be less than it previously would have been”.

Separately, the Government also removed the 5% import tariff exemption that applied to some imported EVs. 

It’s important to note that employers will need to include FBT-exempt electric cars as a reportable fringe benefit on an employee's payment summary. We recommend you seek financial advice on what impact this could have to your personal circumstances, including means-tested government benefits.

How Much Could the EV Discount Save You?

The potential FBT savings could be even higher for more expensive EV models – costing up to the $91,387 luxury car tax threshold for fuel-efficient vehicles – and could further complement the benefits of novated leasing.

While the legislation is expected to deliver more affordable EVs, it is also worth noting that electric cars may be cheaper to run and maintain, making them even more attractive to potential drivers. By way of example, Nissan estimates that a NSW commuter can save $30 a week by switching from a petrol car to its Leaf model.

The discount, complementing the many benefits of novated leasing, could be a great way to make your money work for you.

Leading the EV Novated Leasing Charge

Maxxia is one of Australia’s most experienced novated leasing providers, servicing thousands of employees each year from organisations across a wide range of sectors all over the country.

This longevity means we know novated leasing and the benefits salary packaging a car can bring, including those that relate to the ever-increasing number of electric and plug-in hybrid vehicles our customers' lease.

The adoption of EVs is evolving quickly, and we maintain our vision to be the partner of choice in supporting our customers’ transition to low and zero-emission vehicles in Australia.

Have you considered an electric or hybrid for your next car? Give us a call on 1300 123 123 and put our expertise to the test. 

Let Us Help You Stay Informed

At Maxxia we believe EV educational information is important. We will continue to work with industry groups such as NALSPA (National Automotive Leasing and Salary Packaging Association) and the Electric Vehicle Council, the national body for the electric vehicle industry in Australia, to provide you with the latest EV updates, including those from the Federal Government’s National EV Strategy.

If you’d like to know more about the ins and outs of electric vehicles, how novated leasing works with an EV and any other commonly asked questions, check out our website here.

* Sourced from TREASURY LAWS AMENDMENT (ELECTRIC CAR DISCOUNT) BILL 2022