The Australian Government's Fringe Benefits Tax (FBT) exemption on electric vehicles has transformed the landscape of salary packaging. Since its introduction, thousands of Australians have taken advantage of this benefit to drive an electric vehicle at a significantly reduced cost.
What is the FBT Exemption?
Ordinarily, when an employer provides a car to an employee for private use, the employer must pay Fringe Benefits Tax. This tax is calculated based on the value of the vehicle and is typically passed on to the employee through reduced salary packaging benefits.
However, for eligible electric vehicles, this tax is completely exempt. This means employees can access the full value of their novated lease without the FBT burden eating into their savings.
Which Vehicles Qualify?
To be eligible for the FBT exemption, a vehicle must meet certain criteria:
Be a zero or low emissions vehicle (battery electric, hydrogen fuel cell, or plug-in hybrid)
Have a value below the luxury car tax threshold for fuel-efficient vehicles
Be first held and used on or after 1 July 2022
How Much Can You Save?
The savings from the FBT exemption can be substantial. For a typical electric vehicle valued at $60,000, the FBT exemption could save an employee between $5,000 and $9,000 per year compared to a traditional petrol vehicle of the same value.
Getting Started
If you're considering an electric vehicle through a novated lease, speak to our team at Younovate. We can help you understand exactly how much you could save based on your salary and circumstances.