Switching to an electric car (EV) now not simplest allows the environment but also can supply considerable monetary benefits to you and your circle of relatives. One of the most effective methods to maximize the ones savings is by going with a novated hire. With novated leasing you can bundle all your automobile expenses into one convenient price and due to the fact EVs don’t incur any FBT your annual tax invoice will come down drastically!
What Is a Novated Lease?
A novated hire is a three-manner settlement among you, your enterprise, and a leasing employer. Your corporation deducts the rent payments out of your pre-tax income, decreasing your taxable earnings. This approach you successfully pay much less tax whilst still playing the blessings of riding a brand new automobile.
When it comes to electric vehicles, the financial benefits of a novated lease are even more compelling due to the combination of tax savings, lower running costs, and potential government incentives.
1. Leverage Pre-Tax Salary Payments
One of the key advantages of novated leasing is the ability to make bills out of your pre-tax income. Here’s the way it really works:
– Your rent bills are deducted from your profits earlier than tax is applied, lowering your taxable profits and the amount of earnings tax you pay every year.
– This shape lets in you to finance an electric vehicle in a much greater tax-green way in comparison to the usage of after-tax dollars, as you’ll with a conventional automobile mortgage.
For example, if you’re incomes $one hundred,000 a 12 months and lease an EV with payments of $12,000 annually, that amount is deducted earlier than tax, that means you’re only taxed on $88,000. This can result in considerable tax financial savings over the lease time period.
2. Bundle Your Running Costs
One of the predominant benefits of novated leasing is that it bundles all your car-associated prices into one convenient pre-tax price. This consists of:
– Registration
– Insurance
– Maintenance
– Charging expenses
By such as these kind of going for walks prices on your novated lease, you pay for them with pre-tax dollars, in addition lowering your taxable income. With an EV, running prices which include renovation and charging are usually lower than for petrol or diesel cars, so you’re also saving at the everyday fee of owning a car.
3. Claim GST Benefits
In addition to paying with pre-tax dollars, novated leasing allows you to avoid paying GST on the purchase price of the vehicle and its running costs. This can prevent an extra 10% on the cost of the automobile and the related expenses like insurance, preservation, and registration.
For example, if your EV charges $60,000, you could shop almost $five,500 in GST that you might otherwise should pay if purchasing the car outright.
4. Take Advantage of Fringe Benefits Tax (FBT) Exemptions
The 2022 modifications in Australian tax legal guidelines have added Fringe Benefits Tax (FBT) exemptions for all electric powered motors below the luxury car tax threshold. This manner that many EVs may be leased through a novated lease without attracting FBT, which turbocharges your tax savings.
To qualify for this FBT exemption, your electric powered car should meet positive standards, such as:
– The EV ought to be below the posh car tax threshold for gasoline-efficient cars, that is presently set at $ninety one,387 (for 2024-2025).
– The automobile must be absolutely electric or a plug-in hybrid electric powered car (PHEV).
5. Use Novated Leasing to Ensure You Always Have a New Car
Leasing an electric vehicle through novated leasing allows you to upgrade to a new model every few years. With EV technology advancing rapidly and new models coming onto the Australian market, this can be a significant advantage. You’ll always have access to the latest models with better range, faster charging, and more advanced features, all while continuing to enjoy tax savings.
When your lease ends, you can either pay out the residual value to own the vehicle, re-lease the vehicle, or upgrade to a new model. This flexibility allows you to drive the latest EVs without worrying about long-term ownership costs or depreciation.
Maximise Your Tax Savings with a Novated Lease
Leasing an electric vehicle through a novated lease is one of the smartest ways to maximise your tax savings while driving a brand-new car. By leveraging pre-tax payments, bundling running costs, taking advantage of GST exemptions, and benefiting from FBT exemptions, you can save significantly compared to traditional financing methods.
With government incentives and the growing popularity of EVs in Australia, now is the perfect time to consider leasing an electric vehicle. CarBon Novated Leasing makes the process simple and straightforward, helping you get the most out of your tax savings while enjoying the many benefits of driving an electric vehicle.
