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A novated lease allows you to use money from your salary before tax is taken out. This money is used not only for your vehicle’s repayments, but also general running costs, including petrol or charging, registration, insurance and servicing. You’ve got these big expenses pre-budgeted for, while potentially reducing your taxable income. 

Owning a car outright or using a traditional car loan means your payments and/or general running costs are all made with post-tax dollars.

The Electric Car Discount is an initiative from the Federal Government to help make EVs more affordable by exempting eligible cars from Fringe Benefits Tax. To take advantage of the Discount, your novated lease vehicle needs to be:

• Fully electric or a plug-in hybrid*
• Priced under the Luxury Car Tax threshold
• A new car
• First held and used on or after 1 July 2022

Oly can help you get set up with the discount and FBT exemptions if you take out a novated lease on an eligible EV. Click here for more details.

*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.

FBT stands for Fringe Benefits Tax, which is a tax applied to benefits you receive through your employer that aren’t a salary. A novated lease is considered a fringe benefit.  

Because novated leases incur FBT, it is recommended to make post-tax contributions to offset the FBT liability. This is known as ECM, or the employee contribution method, because the employee (you) is the one making the contributions. 

If you have an eligible electric vehicle, your lease could be exempt from FBT requiring no post tax contribution, thanks to the Electric Car Discount. 

Yes, you can claim electricity for charging an EV – both at home or at a public charging station. However, only one of these methods can be claimed per Fringe Benefits Tax year (which goes from 1 April – 31 March).

Currently, the installation and cost of home charging station cannot be claimed under a novated lease agreement. Owning a car outright or using a traditional car loan means your payments and/or general running costs are all made with post-tax dollars.

The good news about novated leases is that they could move with you if you change employers. Even though your employer manages your lease payments via your salary, the lease is in your name. 

If you change jobs during your lease term, speak to your new employer about transferring the lease to your new organisation.

Alternatively, you could choose to buy your car outright by paying the residual value or keep making payments with post-tax dollars. Owning a car outright or using a traditional car loan means your payments and/or general running costs are all made with post-tax dollars.

There are four options at the end of your lease: 

1.Take out a new lease on a new car. 

2.Extend your current lease on your current car. 

3.Buy your current car outright by paying the residual value. 

4.Return your current car and pay any residual owing once the vehicle is sold. 

For more details, visit here.