Save tax on an electric vehicle

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


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