Novated leasing could be a more affordable way to hit the road in an electric vehicle. Photo: ACT Government.
More Canberrans than ever are choosing to lease electric vehicles (EV), but additional government incentives could see more drivers making the shift to a greener alternative.
With the ACT Government offering electric vehicle incentives, including two years’ free registration and interest-free loans of up to $15,000, there’s been a spike in EV purchases, but the trend is also extending to novated leasing.
Alliance Leasing managing director Maria Lindgren says about two years ago one in every 38 leasing enquiries was for an electric vehicle, but now it’s one in every 12.
“This is consistent with an increase in community desire to reduce emissions, the cost of EVs reducing, and government concessions for EVs,” she says.
Maria says that with better government incentives, leasing an EV could be even more attractive.
“Interest in EVs has increased since ACT Chief Minister Andrew Barr’s announcement of two years’ free registration on new or secondhand zero-emissions vehicles,” she says.
“This has reduced some running costs on vehicles that already have lower maintenance costs because they have fewer moving parts than conventional vehicles.
“If the government wanted to make EVs more attractive, then removing the fringe benefits tax for EVs when doing a novated lease would see a further increase in the take-up.”
Purchasing a new EV outright is more expensive than a petrol or diesel vehicle so novated leasing is proving a more affordable choice for people on a salary seeking a greener alternative.
“Ignoring on-road costs, taking out a novated lease for a Tesla Model 3 at $62,900 sees the financed value fall by 10 per cent to $56,610 because GST is paid by the company,” explains Maria.
“A person on $100,000 and taking the lease over three years will save around $2800 a year through a novated lease compared to a personal loan for the car’s full value.”
To set up a novated lease, you will need to have a salary packaging agreement in place with your employer.
RSM Australia senior manager Young Han says if the ACT Government offered incentives such as introducing fringe benefits tax exemption for EVs and subsidising the installation of home chargers, more people would be buying and leasing EVs.
“Leasing an electric car is probably more affordable than taking out a loan and buying one, but leasing an EV does not cover the cost of the charger and battery,” she says.
“If the government looked at introducing more benefits, I think more people would jump on electric cars.”
Young says the savings made by salary sacrificing depends on how much an employee earns and the cost of the EV.
To alleviate any fringe benefits tax liability to the employer, Maria says Alliance Leasing uses the employee contribution method (ECM) which means a portion of your lease costs are collected from your salary after PAYG income tax is applied.
A novated lease is a three-way car finance agreement between you, your employer and a leasing company that enables to you to bundle all of your car running costs into one regular ongoing tax effective payment.
By doing this you can reduce your taxable income, pay less tax and receive significantly more money in your pocket.
Find out how much you could save by leasing an EV through Alliance Leasing. For financial and tax advice when it comes to novated leasing, contact RSM Australia.
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