What Are the Requirements for EV Novated Lease?
As electric vehicles (EVs) become more popular in Australia, many people are looking at novated leases as a way to drive an EV while enjoying significant tax benefits. But what are the specific requirements to qualify for an EV novated lease? Let’s break it down.
Employment Status
To be eligible for a novated lease, you must be employed and receive a regular salary. This is because the lease payments are deducted from your pre-tax income through a salary packaging arrangement between you, your employer, and the leasing company. If you're a contractor or self-employed, novated leasing may not be an option for you.
Employer Participation
A key requirement for an EV novated lease is that your employer must agree to the salary packaging arrangement. Not all employers offer novated leasing, so it’s important to check with your HR department to see if this benefit is available. Many businesses are starting to offer EV novated leases as part of their employee benefits, especially as sustainability becomes a bigger focus.
Vehicle Eligibility
While novated leases are available for a wide range of vehicles, not every electric vehicle will qualify. Some leasing companies may have restrictions on the type of EV you can lease, based on factors like the make, model, and cost. Make sure to check with your leasing provider about which EVs are eligible for a novated lease.
Lease Duration and Costs Covered
A novated lease typically lasts between 1 and 5 years. During this period, the costs associated with running the vehicle—such as insurance, registration, servicing, and even charging costs—can be bundled into the lease agreement and paid for with pre-tax dollars. This not only simplifies your car expenses but can also lead to significant tax savings.
Tax Benefits and FBT Exemption
One of the biggest draws of a novated lease for EVs is the Fringe Benefits Tax (FBT) exemption that applies to some low-emission vehicles. This means you can enjoy the tax benefits of salary sacrificing without the FBT burden, making an EV novated lease an even more attractive option.
The requirements for an EV novated lease include being employed, having an employer willing to participate, choosing an eligible electric vehicle, and understanding the financial aspects of the lease. By meeting these criteria, you can enjoy the tax savings and environmental benefits of driving an electric car.
Ready to explore your EV novated lease options?
Contact Novated Finance Australia today to get started on your journey towards greener driving.