Save $6,191 in GST on the initial purchase price
Pay $0 GST on your car running expenses
Pay using pre-tax salary (saving you $1000s)
Pay $0 fringe benefits tax on eligible models
Shopping around for the right novated lease can save you thousands of dollars in interest and fees.
In our Volvo XC40 novated lease guide:
The XC40 Recharge was Volvo's first electric car to hit the market and has achieved early success in Australia, with almost 1,000 cars sold in 2022.
This of course is at a time when sales of EVs in Australia are still low by international standards. Nonetheless the Volvo XC40 was one of the top selling EVs in Australia last year.
Despite adding new EV models, including the Volvo C40 Recharge, the Swedish manufacturer is still a long way behind brands like Tesla, whose Model 3 and Model Y dominate the EV sector. But for drivers looking for a premium family car and want to make the transition to an EV with trusted brand with a reputation for quality, the Volvo XC40 is a strong contender.
Importantly, the XC40 Recharge's pricing means it's eligible for the fringe benefits tax exemption on electric vehicle novated leases. In fact, it's one of the most expensive cars to qualify, meaning XC40 drivers can take full advantage of the generous tax incentive.
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Volvo XC40 Recharge Plus
Volvo XC40 Recharge Twin
Choosing a novated lease for your Volvo XC40 Recharge means you'll paying for the car plus virtually all of your running costs through your pre-tax salary.
You'll also benefit from a GST discount on the up front cost of the XC40. This is because it's the lease company, not you, who's paying for the car initially.
With this arrangement (also known as car salary sacrificing), you lease the Volvo XC40, and the payments are deducted by your employer from your salary and paid directly to the leasing company.
Once the lease term ends, you can pay off the car own it outright by making the final novated lease residual payment. Or you can extend the lease for a new term.
The novated lease company can set up your Volvo XC40 novated lease to include most running costs. This boosts the tax savings, as you are paying from pre-tax salary and enjoy a GST discount on packaged costs:
Please note that certain related costs can’t be included. For instance, the cost of installing a home battery or fast charger for your Volvo XC40 cannot be packaged with your lease.
Based on the current estimated pricing from Volvo, the XC40 Recharge Plus and XC40 Recharge Ultimate will be eligible for the fringe benefits tax exemption on electric car novated leases in FY 2023/24.
This is because the pricing comes in under Australia's luxury car tax threshold.
Just be aware that the actual price of your Volvo XC40 Recharge (and whether you're eligible for the exemption) will also depend on variable expenses, including delivery costs, extras added to your vehicle before it's delivered and the cost of certain warranties.
If you're eligible, the FBT exemption makes a novated lease on a Volvo XC40 considerably cheaper than a car loan, or even buying the car with cash.
When your Volvo XC40 novated lease term ends, you will have three main options:
The residual payment on your Volvo XC40 novated lease will depend on the purchase price of the vehicle and the length of your lease. As an example, the residual payment on a XC40 Recharge Plus with a 5-year novated lease (purchase price: $84,298) would be $24,263.16 (inclusive of GST) or 28.13% of the purchase price. This is based on the minimum residual value rates set by the ATO.
Remember you’ll need to use after-tax money to make the residual payment on your Volvo XC40 novated lease.
Novated lease guides and resources
Find out more about the possible savings, benefits and things to watch out for, plus your range of options with a novated lease in Australia.