If you’re in the market for an electric vehicle (EV), or a plug-in hybrid vehicle (PHV), then it’s worth considering the recently introduced Fringe Benefits Tax (FBT) exemption on salary sacrifice for electric vehicles.
When leasing a vehicle, one of the costs is the FBT on the personal use component of the car. For most users this is a 20% statutory rate, but other rates can apply. This must be paid from after-tax salary.
There are a few conditions to be eligible for the FBT exemption, which include:
- The purchase price (including extras) must be below the luxury car tax threshold. For electric vehicles, this is $84,916 (currently).
- The car must be an electric vehicle or a plug-in hybrid vehicle. From 1 April 2025, only electric vehicles are eligible.
- The car must have been purchased after 1 July 2022.
For a base model Tesla worth $64,300, the FBT saved would be $12,573.
Keep in mind that there are other consequences to entering into a novated lease which should be considered. If you want to know more, then;
- Talk to us;
- Contact your salary packaging provider;
- Read more of the detail via this link to the ATO: Electric cars exemption
