Taking out a novated lease on an eligible electric vehicle differs from a fuel-powered vehicle because there is no post-tax component to deductions. This could save employees thousands – potentially making eligible EVs more affordable to own and operate!
Let’s take an employee who earns $80K per annum and they are thinking about taking out a novated lease on a MG ZS Electric Vehicle. On a standard novated lease with the Employee Contribution Method (ECM), they could save around $12,000 over the life of a 5-year lease. With the Electric Vehicle Discount, their life of lease savings could increase to $31,000 – a difference of $19K*.
*Assumptions: The estimated potential tax benefit is exclusive of GST and is based on the assumption that you would have paid for the lease from your post-tax salary (as opposed to salary packaging those payments from your pre-tax salary or a combination of your pre and post-tax salary). Payments include: Your car payments, fuel, electricity , registration, tyres, insurance and scheduled servicing. The estimated annual benefit will vary depending upon salary, employment circumstances, selected benefits and applicable tax treatment. The example assumes you earn $80,000 a year, a 5-year lease term, an annual distance travelled of 20,000kms and a 28.13% residual value. The estimated annual operating costs includes estimates of fuel, electricity , maintenance, tyres, registration, comprehensive insurance and fleet management fee and are exclusive of GST. GST of 1/11th is payable on your ECM contributions. State Stamp Duty rates apply. PAYG tax rates effective 1 July 2020 have been used. MG ZS Electric Vehicle assumed to be exempt from Luxury Car Tax.