The EV Discount powers on for Australian drivers, after the government announced the policy will continue unchanged until 1 April 2027.
Two rounds of changes will then follow, which we will explain in more detail below. Importantly, all of these proposed changes are subject to being passed by Parliament.
Things you need to know about the EV Discount update
The key takeouts explained
From 1 April 2027
Electric cars costing less than $75,000 will remain fully FBT-discounted, meaning you can continue to pay for eligible EVs up to this value with 100% before-tax dollars.
EVs costing more than $75,000 but below the Luxury Car Tax (LCT) of $91,387 will be eligible for a 25% Fringe Benefits Tax (FBT) discount. (For more information about FBT, click here.)
From 1 April 2029
All EVs costing less than the LCT will be eligible for a 25% FBT discount. This will remain the policy, with no end date.
Grandfathering of existing leases
All existing arrangements will be honoured until the end of their lease period, so if you settle your novated lease and take ownership of the car before April 1 2027, you could still enjoy 100% pre-tax payments.
The EV Discount difference
From now until at least 1 April 2027, thanks to the EV Discount and novated leasing you could pay around the same weekly price for a new electric car as an equivalent petrol car – potentially saving you thousands of dollars.
In this example, the Tesla 3’s driveaway price is over $20,000 more than the Mazda CX-5, yet the cost per week is comparable.
The EV Discount unpacked
With the EV Discount and novated leasing, 100% of your car payments are made with before-tax dollars – on eligible EVs retailing up to the Luxury Car Tax threshold.
A novated lease on an eligible EV differs from that of a fuel-powered vehicle, because there is no post-tax component to deductions. This means payments on EVs are now similar to petrol cars worth thousands less.
It also means you could end up paying less tax, in turn giving you more spending money!
Want to know how much you could save? Crunch the numbers today.
For an indicative snapshot of how much a novated lease might cost, and how much could it save you, check out our calculator.
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**For High Fuel Prices? Go Electric - Further Information and data visit: https://www.remserv.com.au/news/novated-leasing/high-fuel-prices-switch-to-electric-with-remserv-novated-leasing
*Novated Lease example: The estimated potential tax benefit is over the full-term of the lease, is exclusive of GST and is based on the assumption that you would salary package using Employee Contribution Method (ECM) or Fringe Benefits Tax Exempt Method. The Fringe Benefits Tax Exempt Method is only used for eligible electric vehicles under the luxury car tax threshold of $91,387. Payment includes: Your car payments, fuel or charging, registration, tyres, insurance, scheduled servicing, fleet management fee and are exclusive of GST. The estimated annual benefit will vary depending upon salary, employment circumstances, selected benefits and applicable tax treatment. The example assumes you earn $90,000 a year, a 5-year lease term, an annual distance travelled of 15,000kms and a 28.13% residual value. GST of 1/11th is payable on your ECM contributions. State Stamp Duty rates apply. PAYG tax rates effective 1 July 2024 have been used.
Things you need to know: This general information doesn’t take your personal circumstances into account. Please consider whether this information is right for you before making a decision and seek professional independent tax or financial advice. Conditions and fees apply. The availability of benefits is subject to your employer’s approval. RemServ may receive commissions in connection with its services. From 1 April 2025, a plug-in hybrid electric vehicle is no longer considered a zero or low emissions vehicle under FBT law. However, your employer can continue to apply the exemption if both the following requirements are met: 1) Use of the plug-in hybrid electric vehicle was exempt before 1 April 2025. 2) You have a financially binding commitment to continue using the vehicle for private use on and after 1 April 2025. For this purpose, any optional extension of the agreement is not considered binding. To qualify for the EV discount, plug-in hybrid electric vehicles must have been delivered by midnight on 31 March 2025. Due to high demand and stock limitations there may be some vehicles that do not meet the delivery deadline for the EV Discount. Customers are advised to confirm delivery timelines before proceeding with their order.
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