Electric vehicles (EVs) are now more affordable to staff taking out a novated lease, thanks to a government scheme that has a raft of benefits for both employers and their people.
An employee leasing an electric vehicle could now save thousands of dollars thanks to a new government initiative aimed at boosting the number of environmentally friendly cars on our roads.
The Electric Vehicle Discount was launched in late 2022 to make clean energy vehicles with a retail price of less than $84,916 cheaper to access by exempting them from fringe benefits tax (FBT) and import tariffs when they are associated with a novated lease.
This means EV drivers could save twice as much as those leasing petrol engine cars when they take out a novated lease.
What is the EV Discount?
The federal government introduced the scheme, which applies to any novated lease taken out on or after 1 July 2022, to accelerate the take-up of more sustainable cars.
Unlike leases on petrol cars, the EV Discount is exempt from the 47 per cent FBT and five per cent import tariffs, potentially saving another $3000 to $5000 a year compared to a lease on a petrol car. It’s available for both new and used vehicles.
“Looking at a petrol car like the MG ZS Essence, someone earning $80,000 per annum could save over $10,000 over a five-year novated lease,” says Liam Day, EV Product Manager of Australia’s largest novated lease provider Maxxia. “But under the EV Discount, the potential saving is over $26,000 over the life of the lease – a difference of over $16,000.
“It’s a significant benefit that simply isn’t available outside of their employment, but also a financial motivator for employees to reduce their carbon footprint, likely years before they’d otherwise be able to do so.”
It’s good news for company fleets too, with potential savings of over $10,000 per year on cars assigned to employees.
“Under the EV Discount, the potential saving is over $26,000 over the life of a five-year lease! It’s a significant benefit that simply isn’t available outside of employment.” – Liam Day, Maxxia
Savings from novated leases
When an employee takes out a novated lease, they pay for it through deductions from their pre-tax wages, potentially reducing the amount they pay income tax on.
Such leases don’t just have to cover the purchase price, stamp duty and registration – they can also include running costs such as insurance, fuel, tyres and servicing. So practically every expense associated with their car could represent a further reduction in income tax.
Maxxia not only sources the vehicles through its nationwide fleet discounts – it can also help arrange finance, insurance and fuel discounts. All repayments and costs can be combined into one regular payment to make servicing, repairs and paying bills as easy as possible. You can find out more here.
Standing out from the crowd
But the EV Discount benefits don’t stop with employees – there are several reasons why both small and large organisations are jumping on board.
“More and more people want their employers to be good corporate citizens,” says Day. “An initiative as simple as offering EVs through salary sacrifice is a great opportunity to stand out from the crowd, enhance your ESG credentials and signal that you’re committed to taking tangible action on environmental and sustainability issues.”
At a time of widespread skills shortages, it’s more important than ever for organisations to nurture strong employee value propositions to attract top talent. And a commitment to reducing carbon emissions can be an effective strategy.
“An initiative as simple as offering EVs through salary sacrifice is a great opportunity to stand out from the crowd.” – Liam Day, Maxxia
Two thirds of those surveyed in a global IBM study last year said they were more likely to accept a job if their new employer was strongly committed to sustainability. Worryingly, another report found 83 per cent think their employer isn’t currently doing enough.
The electric advantage
EVs are still more expensive than standard petrol engine models, but they cost far less to run. The average Australian drives 15,000km a year, which sets them back around $2160 if they fill up with petrol, but only $600 if they plug into the mains instead. And, if all their household power comes from solar panels, then that figure drops to zero.
Not only that, EVs have fewer moving parts, so repair bills can also be slashed. Tesla even claims that its cars are designed to eliminate the need for service as wear and tear is kept to a minimum.
But it’s the environmental impact that draws most drivers to finally ditch the 95-octane unleaded, as petrol guzzlers emit over three times as much CO2 per kilometre as EVs. Over a car’s lifetime that can be 40 more tons!
Join the rEVolution
Maxxia is Australia’s largest novated leasing provider and an expert in helping organisations roll out the EV Discount to benefit their employees.
Download Maxxia’s guide The EV Discount explained for employers.