GST saving on the vehicle (up to $6,191) PLUS running costs
100% of your lease payments are made pre-tax (with no FBT)
Package all your car running costs to save more in tax
Shopping around for the right novated lease can save you thousands of dollars in interest and fees.
In our EV novated lease guide:
The cost of buying an EV has been a barrier in the past for many people. In fact, most Australians still believe electric vehicles are too expensive.
But things are changing.
Now, if you finance an electric vehicle through a novated lease, the tax savings can make an EV considerably cheaper than a non-EV with a similar purchase price.
This is mainly due to the fringe benefits tax (FBT) exemption for eligible EVs and PHEVs financed through a novated lease.
EV novated lease pricing (car and all running costs included)
An EV novated lease allows you to pay for an electric vehicle and most running costs directly from your salary before tax is deducted.
You’ll enter a novated lease agreement with your employer and a lease company. Here’s what happens:
The FBT exemption on eligible models reduces the cost of an electric vehicle novated lease by thousands of dollars per year.
The exemption was introduced in late 2022 by the Federal Government and means there is $0 payable in FBT on eligible electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) valued below the luxury car tax threshold ($89,332 for FY 2023/24).
FBT normally does apply to a novated lease (and most other benefits provided by employers to employees).
If FBT is payable, the novated lease is usually set up to include after-tax contributions to offset the FBT amount. This reduces the income tax savings and is one of the potential drawbacks of a novated lease.
But with an eligible EV or PHEV, 100% of the lease payment is made using your pre-tax salary. This makes novated lease deals on electric vehicles particularly appealing at the moment.
The incentive has made a massive difference already. For example, in June 2023, electric vehicles accounted for 8.8% of new vehicle sales in Australia, compared to 1.8% in the same month last year. In the period from January to July 2023, just under 50,000 news EVs were sold in Australia, compared to 33,410 EV sales in all of 2022.
The FBT exemption on PHEVs will stop on 1 April 2025, and from that point on only zero-emission (fully electric) vehicles will be eligible.
However, the ATO has clarified that if you commenced a novated lease before that date, the exemption will still apply to the existing agreement beyond the exemption deadline.
FBT will apply to any new leases or lease extensions (refinances) on PHEVs that started after 1 April 2025.
|Tesla Model Y (RWD)||Novated lease||Car loan|
Vehicle driveaway price
Up-front GST Saving
Weekly cost (incl running costs)
Annual income tax saving
Novated lease residual
Total cost over 5 years to own car
*Based on estimated vehicle pricing from manufacturers as at December 2023.
EV novated leases can be set up to include vehicle running costs in the regular lease payment. This means you maximise your tax savings and have the convenience of one payment for almost all of your car expenses.
With an EV novated lease, there is the extra advantage of the FBT exemption applying to your packages running costs too.
Running costs you can include (FBT-free):
EV drivers can claim back charging expenses through their novated lease in one of two ways, according to a draft guideline from the ATO:
Bear in mind some related costs cannot be included, such as the cost of installing a battery or fast charger in your home. A replacement battery for the car itself will also not be exempt if it significantly improves the performance of the car.
Overall the FBT exemption is going a long way to removing one of the main barriers to people owning an EV in Australia.
But there are several other common misconceptions about electric vehicles in Australia, and indeed about novated leases. Here’s what you need to know about some of the myths you may have heard:
Based on purchase price alone, EVs are still generally more expensive than equivalent petrol and diesel cars.
BUT if you factor in the tax and other government incentives available, plus the much lower fuel costs, in many instances it will work out significantly cheaper overall to drive an EV, particularly when you compare novated lease costs versus car loans.
What's more, as usage grows, the stock of more affordable used EVs available to buy will become larger. You can also pay for a used car with a novated lease.
The supply of electric vehicles to Australia has improved a lot in 2023. In fact, delivery times on EV brands like Tesla and BYD are among the fastest of any new vehicle you can buy currently.
The reality is delivery times for new vehicles vary more based on the manufacturer and model of car than whether whether the vehicle is electric or not.
It’s true that people on higher incomes save more with a novated lease, because they will be in a higher income tax bracket and paying a higher marginal rate of tax. However, if you are paying income tax at all, you can save with a novated lease.
Plus, one of the primary tax savings – the GST discount on the purchase price of your vehicle – will be exactly the same regardless of what your income is.
Novated leases are very flexible and can be tailored to most people who are eligible through their employer, including people who have a bad credit history.
The residual payment represents an estimate of the value of the car at the end of the novated lease term. In many cases, the actual value of the vehicle will be higher than the residual amount. If that’s the case you can trade in the car, pay off the residual, and keep the difference as tax-free profit.
Owning an EV can certainly be more logistically challenging if you live in an apartment or don't have off-street parking. But charging an EV is much simpler than a lot of people think.
You don't need a home battery or sophisticated charging system. Access to a standard electrical socket is really all that's needed. There is also free charging available in many public spaces (like supermarket car parks), plus a network of public fast-chargers you can pay to use.
Eligible new and used electric vehicles up to a value of $78,000 are exempt from stamp duty.
Up to $3,000
Zero and low emission vehicles (ZLEVs) are eligible for a registration discount.
Discounted motor vehicle duty rates apply to high-value low-emission (120gm/km) passenger vehicles compared to equivalently-priced petrol and diesel vehicles (priced above $71,849).
Up to $100 per year for the registration discount.
Motor vehicle duty saving will depend on the value of the EV.
A discounted vehicle registration rate applies.
Discounted motor vehicle duty rates apply to high-value low-emission (120gm/km) passenger vehicles compared to equivalently-priced petrol and diesel vehicles (priced above $71,849)
Rego saving depends on the vehicle. E.g. Currently a $74.50 annual saving on an EV versus a 4 cylinder petrol vehicle (both private passenger cars).
Motor vehicle duty discount depends on the value of the vehicle but roughly works out at a 33% saving.
WA's rebate scheme offers $3,500 on new EV purchases with a dutiable value of $70,000 or less. To be eligible, the vehicle must be powered solely by batteries or hydrogen fuel cells that do not emit greenhouse gases. Hybrid vehicles are not eligible for a rebate. The rebate is being offered for 10,000 eligible vehicles licensed in WA, or for three years following the announcement (Saturday 10 May 2025), whichever comes first.
Eligible electric vehicle owners can claim the SA government’s $3,000 subsidy, plus the state's 3-year registration exemption. The SA government has made these incentives available for 7,000 new SA-registered battery electric and hydrogen fuel cell vehicles valued below $68,750 (including GST). Hybrid vehicles or used cars are not eligible. Drivers of eligible vehicles acquired through a lease can still take advantage as long as the vehicle is registered in the name of the individual or the business entering into the leasing arrangement. A copy of the lease agreement needs to be provided as part of the application process.
$3,000 for the EV subsidy
Currently the registration exemption means a $141 annual saving.
From 1 July 2022 to 30 June 2027, the NT Government will waive stamp duty fees for the sale of plug-in EVs up to $50,000 - providing a saving of up to $1,500, and the registration fee when you register your EV - providing an annual $91 saving.
If you own an electric vehicle (EV), you can also apply for funding of up to $1,000 to buy and install a charger at your residential property, or up to $2,500 for a business.
Up to $2,591 in the first year of owning an EV if you combine the three incentives.
No stamp duty payable on new vehicles that emit up to 130g of CO2 per kilometre (km).
New or used zero emissions vehicles (ZEVs) purchased or acquired between 24 May 2021 and 30 June 2024 are eligible to receive two years of free registration.
Savings depend on the vehicle and its value. E.g. for a new EV with the top emission rating valued at $45,000, the stamp duty saving would be $1,350 versus an non-rated vehicle.
Registration fee waiver may save drivers $329.40 per year.
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.