Automotive News: EV Novated Lease in Australia: Eligibility, Savings, and Key Considerations
Key Highlights
- An EV Novated Lease allows you to bundle your car and running costs into one payment from your pre-tax salary.
- The Australian government’s Electric Car Discount means many electric vehicles are exempt from Fringe Benefits Tax (FBT).
- You can achieve significant tax savings, potentially saving thousands of dollars annually compared to traditional purchasing methods.
- Novated leasing for electric vehicles often includes running costs like insurance, registration, and maintenance for budget predictability.
- A wide range of popular electric vehicles qualify for these benefits, making EV ownership more accessible.
- This arrangement simplifies car ownership by bundling expenses and handling the administrative work for you.
Introduction
Considering an electric vehicle but worried about upfront costs? An EV novated lease offers an affordable solution for Australian drivers. With government incentives like the Fringe Benefits Tax (FBT) exemption, novated leasing makes EVs more accessible than ever. This guide covers everything you need to know about this opportunity.
Understanding EV Novated Lease in Australia
An EV novated lease is a three-way agreement between you, your employer, and a leasing provider. It lets you pay for an electric vehicle and its running costs from your pre-tax income, reducing your taxable income and saving you money.
This option is especially attractive for electric vehicles, as eligible models are exempt from Fringe Benefits Tax (FBT). You get all the benefits of a novated lease without extra tax, maximizing your savings. Here’s how it works.
What is an EV Novated Lease?
An EV novated lease is a flexible way to finance a new electric car. Instead of buying or taking out a traditional loan, you lease the car for one to five years. Your payments cover both the vehicle and running costs, all bundled into one regular payment.
The main benefit is tax savings—you can reduce the GST on the car’s purchase price, allowing you to afford a better vehicle within your budget.
At the end of the lease, you’ll make a final payment (the residual value) and choose what to do next, giving you added flexibility. This approach streamlines and simplifies owning an electric car.
How Does an EV Novated Lease Work in Australia?
An EV novated lease is a simple salary packaging arrangement. Your employer deducts lease payments from your pre-tax salary, lowering your taxable income and reducing your tax bill.
After selecting your electric car, you, your employer, and the leasing provider sign an agreement. Your employer then deducts fixed monthly payments for the lease and running costs from your pre-tax salary, so you always know what you’ll pay and avoid unexpected expenses.
The Federal Government’s Electric Car Discount makes this even better. Eligible EVs are exempt from Fringe Benefits Tax (FBT), letting you keep more of your money. It’s a game-changer that makes driving an electric car more affordable than ever.
Eligibility Criteria for an EV Novated Lease
To qualify for the FBT exemption with an EV novated lease, your vehicle must meet Australian government criteria. It must be valued below the luxury car tax (LCT) threshold for fuel-efficient vehicles—$91,387 for 2025-2026—and first registered on or after July 1, 2022. Eligible cars include passenger vehicles under one tonne, such as most sedans and SUVs. Both fully electric and hydrogen fuel cell vehicles are covered, offering a broad selection of modern EVs for your lease.
Benefits of EV Novated Lease
The financial benefits of an EV novated lease are significant. Paying with pre-tax salary and the FBT exemption can lead to major tax savings—leasing a Tesla Model 3, for example, can save you about $13,300 per year compared to other options. You also avoid GST on the car’s purchase price, saving thousands more and reducing overall ownership costs.
Ongoing expenses are lower too: charging an EV is up to 70% cheaper than fueling a gas car, and maintenance costs are about 40% less due to fewer moving parts. Bundling all expenses—insurance, registration, servicing—into your pre-tax lease payments boosts your savings even further. As a result, an EV that seems expensive upfront may actually cost less per week than a traditional petrol car.
What’s Included in an EV Novated Lease Package?
An EV novated lease combines all car expenses—insurance, registration, and maintenance—into one predictable payment. You can customize your package to include specific running costs, giving you control over your budget. Here’s what’s typically covered.
Running Costs and Maintenance Coverage
A key benefit of a novated lease is bundling your running costs with your car payment, all deducted from your pre-tax salary—saving you more money. Since EVs already have lower maintenance costs than petrol cars, a novated lease makes budgeting even easier.
Your package can cover essential expenses in one manageable payment, helping you avoid surprises and simplifying financial planning.
Typical running costs included are:
- Charging (like fuel)
- Routine servicing and maintenance
- Tire replacements
This all-in-one setup eliminates unexpected bills for major services or new tires.
Options for Insurance, Registration, and Servicing
Beyond daily running costs, your novated lease can cover annual expenses like comprehensive insurance, CTP, and vehicle registration. Including these in your lease spreads payments evenly, reducing financial stress and helping manage cash flow.
Your lease package may include:
- Comprehensive car insurance
- Vehicle registration and CTP
- Roadside assistance
Bundling these essentials lets you drive your electric car with peace of mind, knowing everything is handled.
Choosing the Right Electric Vehicle for Novated Leasing
Choosing the right electric vehicle is an exciting step. With Australia’s EV market growing quickly, you have more options than ever. The key is finding an eligible car that suits your lifestyle and falls below the luxury car tax threshold to maximize savings.
Whether you want a compact city car or a larger SUV for the family, many new EVs qualify for the FBT exemption—including popular models like the Tesla Model Y. We’ll highlight top choices and key factors to consider when deciding.
Popular Electric Vehicle Models Available for Lease
The list of electric cars eligible for FBT-exempt novated leasing is growing, featuring many top models available in Australia. Brands like Tesla, BYD, and Hyundai offer stylish, high-performance options with advanced technology.
Whether you want the sleek Tesla Model Y RWD, the affordable BYD Atto 3, or the versatile Hyundai Kona Electric, there’s a model to suit your needs—all providing zero tailpipe emissions.
Popular eligible models include:
| Brand | Model(s) |
| Tesla | Model 3, Model Y |
| BYD | Atto 3, Dolphin, Seal |
| Hyundai | Ioniq 5, Ioniq 6, Kona |
| Kia | EV6, Niro |
| MG | MG4, ZS EV |
| Polestar | Polestar 2 |
| Volvo | C40 Recharge, XC40 Recharge, EX30 |
Factors to Consider When Selecting Your EV
When choosing an EV, look beyond the sticker price and consider how it fits your daily life. Your driving habits, commute length, travel frequency, and access to charging stations should guide your decision.
Battery range is essential—choose a model that covers your regular needs to avoid range anxiety. Also, factor in your budget, as it affects lease terms and the vehicle’s residual value.
Key considerations:
- Driving Range: Does the battery meet your daily and occasional travel needs?
- Charging Access: Can you charge easily at home, work, or public stations?
- Size and Practicality: Is there enough space for your family, hobbies, or work?
End-of-Lease Options and Considerations
As your lease ends, you’ll need to decide what to do with the vehicle. The key factor is the residual value—the final lump-sum payment set at the start of your lease, based on minimum percentages from the Australian Taxation Office.
Your options are: pay the residual value to own the car, trade it in for a new vehicle and lease, or refinance to keep leasing the same car. This flexibility lets you choose what suits you best, whether you want to keep your EV or upgrade to a newer model.
Key Considerations Before Entering an EV Novated Lease
Before signing a novated lease, assess your personal situation. Since the lease is tied to your job, consider your employment stability and expected annual mileage, which affects running costs. Make sure the lease term and payments fit your budget, despite attractive financial incentives.
Understand the tax implications. The main savings come from the Fringe Benefits Tax (FBT) exemption, which only applies to eligible vehicles under the Luxury Car Tax (LCT) threshold—confirm your vehicle qualifies. A novated lease can lower your taxable income and make EV ownership more affordable, but careful research ensures you get the most benefit.
Conclusion
Exploring an EV novated lease in Australia offers financial and environmental benefits. Understanding eligibility, savings, and key factors helps you make informed decisions that suit your lifestyle and goals. With electric vehicles growing in popularity, now is a great time to consider this leasing option for cost savings and sustainability. Contact us today for a free consultation to find the best options for you.
Frequently Asked Questions
Can I get a novated lease on a plug-in hybrid electric vehicle (PHEV)?
Yes, you can obtain a novated lease on a plug-in hybrid electric vehicle (PHEV) in Australia. However, eligibility may vary based on your employer’s policies and the specific PHEV model. It’s essential to check with your leasing provider for detailed requirements.
What happens if I change employers during my EV novated lease?
If you change employers, you have a few options. You can transfer the novated lease to your new employer if they offer novated leasing. Alternatively, you can continue making the lease payments yourself from your post-tax income or pay out the remainder of the lease term.
Is it possible to include an EV charger in my novated lease package?
Yes, in many cases, you can bundle the cost of a home EV charger and its installation into your novated lease package. This allows you to pay for this essential equipment using your pre-tax salary, adding another layer of savings and convenience to your EV ownership experience.