Save $1,000s with an EV Novated Lease

What is an EV novated lease?

An EV novated lease is a three-way salary packaging arrangement between you, your employer, and a finance company, where your employer deducts lease payments from your pre-tax salary, reducing your taxable income.

With the Federal Government's FBT exemption for electric vehicles under $91,661 (2026-27 financial year), employees can save more than they would with a traditional vehicle novated lease. Employees on a $90,000-$120,000 salary typically save $4,000-$8,000 per year, depending on their income and vehicle choice — actual savings depend on your circumstances.

Why choose an EV novated lease?

• Pre-Tax Savings: Pay from pre-tax income, reducing your taxable income by $15,000-$30,000+ per year
• FBT-Exempt: No Fringe Benefits Tax on eligible battery EVs under the fuel-efficient LCT threshold ($91,661 for 2026-27)
• All Costs Bundled: Electricity, insurance, registration, servicing included in one pre-tax payment
• GST Advantage: Your novated lease provider typically claims input tax credits on the vehicle and running costs, which can reduce the packaged amount you pay
• Fixed Budgeting: One predictable payment covers everything, with no surprise bills
• Upgrade Flexibility: Drive a new EV every few years without the depreciation hit

How it works

FBT exemption explained

The Australian Government offers a complete Fringe Benefits Tax (FBT) exemption for electric vehicles valued below the luxury car tax threshold for fuel-efficient vehicles, which is $91,661 for the 2026-27 financial year (up from $91,387 in 2024-25 and 2025-26). This threshold is updated each financial year - confirm the current figure before relying on it. Note that legislated changes will begin phasing down this exemption from 1 April 2027, introducing a $75,000 cap for the full exemption.

This means:

• Your employer pays zero FBT on the benefit of providing you the vehicle
• You don't need to make post-tax "employee contributions" to reduce FBT
• The full lease amount comes from your pre-tax salary, maximising savings
• Personal use of the vehicle is fully covered under the exemption

Eligible vehicles include: Battery electric vehicles (BEVs) and hydrogen fuel cell vehicles. Plug-in hybrids (PHEVs) do not qualify for the FBT exemption.

What's included in your novated lease package?

Everything is bundled into one convenient pre-tax payment:

• Vehicle Lease: The cost of the EV spread over 1-5 years
• Electricity/Charging: Home charging and public charging costs
• Comprehensive Insurance: Full cover for your EV
• Registration & CTP: Annual rego and compulsory third party insurance
• Servicing & Maintenance: All scheduled services (EVs need very little maintenance)
• Tyres: Replacement tyres over the lease term
• Roadside Assistance: Peace of mind if you break down
• Fleet Management: Administration of the lease and cost tracking

The result? One pre-tax payment that covers all of it, instead of juggling multiple bills.

How much can you save?

Savings depend on your salary and the vehicle you choose. Here are real examples:

Example 1: $90,000 Salary + $60,000 Tesla Model 3

• Annual lease + running costs packaged from pre-tax salary: $18,000
• Marginal tax rate at this salary (2026-27 brackets): 30%, plus the 2% Medicare levy
• Income tax saved by packaging pre-tax instead of paying from after-tax income: approximately $5,760 (32% of $18,000)
• Effective annual cost: approximately $12,240/year instead of $18,000, before establishment and admin fees

Example 2: $120,000 Salary + $75,000 Tesla Model Y

• Annual lease + running costs packaged from pre-tax salary: $22,500
• Marginal tax rate at this salary (2026-27 brackets): 30%, plus the 2% Medicare levy
• Income tax saved by packaging pre-tax instead of paying from after-tax income: approximately $7,200 (32% of $22,500)
• Effective annual cost: approximately $15,300/year instead of $22,500, before establishment and admin fees

These are indicative examples using 2026-27 income tax brackets and assume the vehicle qualifies for the FBT exemption. They exclude establishment fees, administration fees, and any GST treatment specific to your provider. Your actual savings will depend on your personal tax situation, the vehicle chosen, running costs, and your provider's fees — we provide detailed calculations tailored to your circumstances.

Eligibility requirements

To qualify for an EV novated lease, you need:

• Permanent Employment: Full-time or part-time employees (not contractors or sole traders)
• Employer Agreement: Your employer must agree to participate (most do as there's no cost to them)
• Minimum Salary: Generally $50,000+ gross annual income
• Eligible Vehicle: Battery electric vehicle valued under $91,661 (2026-27 threshold) to qualify for the FBT exemption
• Credit Assessment: Standard credit checks apply

What happens if I change jobs?

If you change jobs, the lease can typically be transferred to your new employer, continued personally, or paid out early:

• Option 1, transfer: Most new employers will agree to continue the novated lease. We handle the paperwork to transfer it.
• Option 2, continue personally: You can take over the lease and make payments from your after-tax income until you secure employment with a participating employer.
• Option 3, early payout: You can pay out the remaining lease amount and own the vehicle outright.

In our experience, over 80% of modern employers support novated leasing as it's a cost-neutral employee benefit that improves retention.

Popular EVs for novated leasing

These vehicles are under the $91,661 (2026-27) FBT threshold and suit novated leasing:

• Tesla Model 3: Australia's best-selling EV, from $55,000
• Tesla Model Y: popular SUV with a long range, from $65,000
• BYD Atto 3: affordable family SUV, from $44,000
• MG ZS EV: budget-friendly option, from $42,000
• Hyundai Ioniq 5: fast charging, from $67,000
• Polestar 2: premium Swedish EV, from $69,000
• Kia EV6: award-winning crossover, from $67,000