Are EV Leases Tax Deductible?

Electric vehicles (EVs) have surged in popularity across Australia, not just for their environmental benefits but also for potential financial advantages. If you're considering leasing an EV, you may be wondering whether it's tax deductible. The good news is that, in many cases, an EV lease can provide tax savings, particularly through novated leasing arrangements.

In Australia, a novated lease allows employees to salary package their EV, which effectively reduces their taxable income. The lease payments, as well as other car-related costs like fuel, insurance, and maintenance, are taken directly from pre-tax salary. This can lead to substantial tax savings, making it a financially savvy option for those interested in driving an EV.

Moreover, businesses that lease electric vehicles for work purposes may also be eligible for tax deductions. Lease payments are generally considered operating expenses, which can be claimed as tax deductions. If the EV is used solely for business purposes, you can claim 100% of the lease payments. If the vehicle is used for both business and personal purposes, you may still claim a portion based on the percentage of business use.

It’s important to keep in mind that any tax deductions will depend on individual circumstances, and professional advice should be sought to fully understand the implications. Additionally, recent Australian government initiatives are offering further incentives for EVs, such as the Fringe Benefits Tax (FBT) exemption for eligible electric vehicles, which could provide even greater savings.

Leasing an electric vehicle can be a smart financial choice with potential tax benefits. Whether you're an individual looking to reduce your taxable income or a business seeking operational tax deductions, EV leases offer an environmentally friendly solution with significant tax advantages.

Interested in exploring how much you could save by leasing an EV? Contact us today for more information and expert advice tailored to your