Motorists can save tens of thousands of dollars when buying an EV thanks to the Government’s Electric Car Discount.
A novated lease is already a cost-effective way to get into a new car with benefits such as tax savings. And now the recent Electric Car Discount bill introduced by the Australian government means buying an electric car will save you thousands of dollars more.
The Electric Car Discount incentive was introduced in 2022 and applies to new battery electric cars (EVs) and plug-in hybrid vehicles (PHEVs) purchased after July 1 2022. The scheme also applies to used EVs and PHEVs first registered after 1 July 2022. However, PHEVs will only be covered under the discount until April 1 2025.
How much can I save on an EV with a novated lease and the electric car discount?
First, there are some significant upfront savings with a novated lease such as not paying the GST component of the vehicle’s purchase price. GST adds 10 per cent to the price, so a $55,000 EV will save you $5000 through a novated lease. There is a current limit on this amount which for the 2022-23 financial year is capped at $5885. So you will need to pay any additional GST component on an amount over this. To better understand exactly what a novated lease is and what it’s benefits are, check out our car leasing guide.
Further savings specifically for EVs come via the Electric Car Discount on fringe benefits tax (FBT). When financing through a novated lease, there is no FBT payable at all on any EV or PHEV purchased under $84,916.
But what does that price include? It’s not just the cost of the car’s retail price and according to the Australian Taxation Office the price of the car includes:
- Customs duty
- Dealer delivery
- Standard and statutory warranties
- Accessories and modifications purchased for the car before delivery (excluding disability modifications)
- Treatments such as paint protection or tinted windows
- Fleet rebates and/or other incentive payments
Excluded from the price of the car to meet the amount is:
- Other taxes such as rego, transfer fees, and stamp duty
- CTP insurance
- Extended warranties
- Financing costs
- Service plans
Example of savings with the Electric Car Discount policy
So just exactly how much can you expect to save on an EV if you purchase using a novated lease? Smart Leasing has provided a good breakdown of expected savings on a Hyundai Kona Electric Elite Standard Range. In short, the car leasing company calculates total savings compared to a normal consumer loan to be $31,890. That’s a huge figure.
The bulk of savings are from the finance costs which exclude pre-tax benefit for FBT exemption, the car’s residual value after 5 years, and after-tax running costs.
We’ve used Smart Leasing’s breakdown as an example but this is in no way a sponsored endorsement. We encourage shopping around and you can find this month’s car leasing deals from other providers such as EV Lease, Maxxia, easi.fleet, and others.