Electric Vehicle Exemption for FBT, Will You Go Buy One for Half Price?

Lsaltcheetah on 26/11/2022 - 04:05
Last edited 26/11/2022 - 18:40 by 1 other user

It’s not law… yet. Seems likely now.

not a rickroll but an ATO link

Fringe benefits tax – a 47 per cent tax on companies to stop them giving benefits that aren’t paid through salary. I.e mortgage payments and personal cars.

Electric cars that are provided through work (even if it’s personal use) will be exempt from the company tax which means they will offer it and reduce your taxable income. It will be available to all electric cars below the luxury car tax threshold for fuel efficient vehicles ($85k in 2022). It includes second hand purchases after this date.

Are you going to buy a new electric Tesla 3 or Nissan Leaf or Hyundai Ioniq etc knowing you can potentially get it a half price or a lot cheaper with the tax savings?

I understand it still is a reportable fringe benefit which doesn’t change your tax payable position unless you pay HECS / will reduce family tax benefits etc.

Poll Options

  • 35
    Yes
  • 2
    Yes, multiple
  • 7
    No
  • 1
    I don’t need a car
  • 31
    I’m not buying something just to save on tax
Automotive

Comments

  • payless69 on 26/11/2022 - 04:28

    Add option for the model Plaid!!

    • saltcheetah on 27/11/2022 - 01:03

      Didn’t know this but cool!

  • MS Paint on 26/11/2022 - 05:50
    +17

    Will You Go Buy One for Half Price?

    That's not how it works.

    • saltcheetah on 27/11/2022 - 01:02

      If the company has the exemption why can’t I salary sacrifice the price of the car. If I earn top money then it will reduce my pay and tax? Company won’t mind since there’s no FBT consequences for them.

      Yes, you need to pay upfront first but effectively you are getting for 49% off of you earn a crap tonne.

      • Halo375 on 27/11/2022 - 15:22

        Talk to your company payroll - there’s limits on how much you can claim pre-tax. You’re way off on your calculations - the law changes are still good news though.

        • saltcheetah on 27/11/2022 - 20:47

          There’s no law that gives a pre-defined limit is there?

          It’s a matter of whether your company would allow it in their policy to salary sacrifice $80k. Practically I can see why companies would not want to do it because they take up the $80k risk upfront and slowly take it out of your pay. You could disappear in a month!

          The fact it would take months and months to pay it down would probably stop companies doing it but there’s no harm in asking right?

          Genuinely curious to the practicalities! Accountants? Payroll?

          • Lachy2437 on 29/11/2022 - 06:51

            @saltcheetah: In simple terms you reduce your taxable income by the cost of car ownership. So by salary sacrificing you save the percentage of car ownership costs multiplied by your tax bracket, so people earning $180k plus save 45%, those earning $18-45k only save 19%. This is simplified, there are claimable elements before this legislation etc etc

  • Mcuser on 26/11/2022 - 06:01
    -5

    When they make a dual cab Ute that will do 900ks on a charge sure

    • Lachy2437 on 29/11/2022 - 06:53
      +2

      For me I'm not going to get an EV until it can drive across the Nullarbor in one go whilst I have a kip in the caravan on the back.

  • SBOB on 26/11/2022 - 06:24
    +10

    Ah…you might want to read the legislation again and then brush up on your tax law and understanding of leasing….
    Its not going to result in a half price EV :/

    • avoidfullprice on 26/11/2022 - 07:20
      +4

      Second that. OP misunderstood how things work

    • saltcheetah on 27/11/2022 - 00:58

      So you can’t salary sacrifice an EV? Explain yah?

      What if you don’t lease it and salary sacrifice?

      • Kaz0551 on 29/11/2022 - 07:18

        He is saying you don't get a 50% tax discount. As per my spreadsheet, you save 10-20,000 over 3 years.

  • spal on 26/11/2022 - 07:31
    +3

    I would like to buy a car with my pre-tax income and not need to pay FBT. However, what I am dreading is likely to happen the prices of cars including the used cars within this range will go up. Secondly, anyone who has novated leased a car knows that the interest rates are higher and you pay exorbitant fees for most things. So, if the car isn't used much a significant advantage is lost due to the novated leasing expenses. If however, usage is moderately higher at least some of these higher fixed costs are spread over more kilometres. For example the monthly lease rent will be fixed for your car. So, the more you drive the cheaper per kilometre the costs.
    The attraction of the novated lease companies was also to be able to negotiate fleet deep discount prices. However, will already a massive backlog in electric vehicle supply this will only add further to the demand with nothing much changing at the supply end. Although, not having to pay GST was a big saving too (the car belongs to the lease company and they get to take the GST credit on all expenses).

    • MS Paint on 26/11/2022 - 07:40
      +1

      Although, not having to pay GST was a big saving too

      You still have to pay GST at the end of the lease but obviously it's less.

  • loulou1 on 26/11/2022 - 08:26
    -1

    You forgot that it may also impact other things like Medicare levy surcharge or Private Health Insurance rebate tier

  • pegaxs on 26/11/2022 - 08:46
    +2

    Nissan Leaf? Ain’t nobody buying Nissan Leafs. Too much brand damage.

    And saying you are getting the car for half price is misleading. You’re not going to go in and buy an MG ZSEV for $24k using a FBT reduction.

    • Quantumcat on 26/11/2022 - 08:49

      What's wrong with Nissan Leafs?

      • Euphemistic on 26/11/2022 - 10:00
        +2

        Technology has moved on. Their battery packs are not temperature regulated like other models and battery life suffers. Range of early models was quite small too - but not an issue for enthusiasts who don’t expect to go 300km on a charge.

        Initially the lead was well regarded, but not so much now. The next generation might improve enough to get them back in the game.

      • pegaxs on 26/11/2022 - 10:29
        +1

        Nothing… if you have been living under a rock for the last 6~8 years.

        Nissan Leaf sales have tanked the last few years, so much so to the point that Nissan was considering dumping the model all together.

        It’s a car built on shit/outdated technology and almost every other manufacturer out there has surpassed the Leaf in every way. I mean, why do they still use Chademo when nearly everyone in the industry has moved to CCS2 or Type 2 connectors.

        They were a great car for the time in leading the way into EV adoption, but the time has come to put it out to pasture or scrap everything about the vehicle and completely start again from the ground up.

        It’s not an EV, it’s basically a converted Nissan Tiida with an electric drive train. For the same money, you can buy a dedicated EV platform vehicle with way more features and range. Hell, I would buy a MG ZSEV over a Leaf…

        • MS Paint on 26/11/2022 - 11:07
          +1

          I wonder if we'll be saying this about Tesla in 8 years time 😃

          • pegaxs on 26/11/2022 - 12:01
            +3

            @MS Paint: If Tesla still exists in 8 years time…

        • Quantumcat on 26/11/2022 - 12:03

          Oh ok fair enough I didn't know that. What would you recommend for the cheapest possible as a second car for going around town but not for longer trips? The MG ZSEV?

          • pegaxs on 26/11/2022 - 16:51
            +1

            @Quantumcat: I would recommend waiting.

            The MG 4 will be out very soon as well as the BYD Dolphin/Atto 2. By that time, VW might have their ID3 available and Fiat (vomit) may also announce their 500E for Australia. I would also keep an eye on the GWM Ora series. If you have some more coins, you can look at the Cupra Born as well.

            There are smaller EV's coming next year and I think we might even end up seeing some of our first, real world sub $40k cars that would be well suited to 2nd car/shopping car/work commute car.

            As for cheaper than that… I would look at the MG ZSEV if you needed something more urgently. I would not touch a Leaf with a barge pole, especially any of the ZE0 or AZE0 models (2010~2017)

        • [Deactivated] on 04/12/2022 - 12:05

          For the same money you can buy an import Nissan Note with the e-power setup. Leaf motors, small onboard generator. 1.6/100km range and can out-drag a swift. What's not to love.

    • saltcheetah on 27/11/2022 - 01:05

      Well you’re not going to get the discount straight away. You still have to stump up the cash I agree but by the end of the tax year you could get the tax back and it would be half price.

  • jace88 on 26/11/2022 - 09:36
    +2

    This is exactly what led me to order a Model 3 LR.

    I was planning to buy a Golf R or S3 and wasn't even considering this until I realised less bills, similar thrills.

    EDIT: Wanted to add a bit more colour, I know it isn't exactly a half price deal, and I'll need to wait until SGFleet update my quote once I have a delivery date, but even when factoring in the implicit interest rate plus the overheads/markup from a NL provider, being able to pay out of pretax money makes it very appealing as is being able to return the car after 3 years. I do need to assess whether this is better or worse than the various incentives on offer atm too.

    • spal on 26/11/2022 - 09:55

      Thanks for your experience. It is always better to hear from people who have actually gone ahead and taken the next steps rather than listening to someone like me who is a fence sitter. I should probably make further inquiries and get some quotes too.

      • jace88 on 27/11/2022 - 21:04
        +1

        Just make sure you do your sums on this. Back when interest rates were close to zero, NL providers were still having implicit interest rates quite a bit higher than say, what you'd get on a mortgage or other car loan and hence the justification for going NL was really driven by the FBT exemption. Now that interest rates are on the rise, the marginal benefit once you factor in FBT exemption continues to shrink relative to other forms of finance, or in my case, withdrawing from offset/redraw on my mortgage. And as others have mentioned, you also do lock yourself into your current employer/employers who are willing to take on your NL.

    • eciuj on 06/07/2023 - 16:34
      +1

      haha same. I was going to buy a Golf R and paying it outright meant I had to take it out of the offset. Paying that money upfront would have hurt, then you have the ongoing sting of the higher interest due to lost offset. Somehow the wife ended up getting a Telsa and I still have my old car haha

  • brendanm on 26/11/2022 - 10:41
    +1

    I'm going to buy 10, then sell them and double my money.

    • pegaxs on 26/11/2022 - 12:02

      Or, better still, you buy them for half price and sell them to me, who can buy them for half price, and you buy them back at half price and before long, with all this back and forth buying and selling, we will have an electric car that only cost us $5.

      • MS Paint on 26/11/2022 - 12:40
        +1

        Then I'll give you $5 for the EV. I've PM'd you for your PayID to transfer the funds.

      • brendanm on 26/11/2022 - 13:12
        +1

        Damn you're good, I'm ordering the Tesla's right now.

    • Tleyx on 30/11/2022 - 13:49

      How much are you earning to afford ten and claim tax?

      • brendanm on 30/11/2022 - 14:49

        $500k

        • SBOB on 30/11/2022 - 19:15
          +3

          Ah, I see you also earn the average ozbargain members salary :)

          • brendanm on 30/11/2022 - 19:44

            @SBOB: Correct, anything less is quite disgusting.

  • Kaz0551 on 26/11/2022 - 17:13
    +4

    I did math a few weeks ago for this. Looks better in my spreadsheet, but… you save 15k at the end of the 3yr term (model Y at 70k with extras - GST)

    Novated Budget 3Y M A 3Y
    Lease Payment Included $1,502.20 $18,026.40 $54,079.20
    Service & Maintenance 5 Services Included $42.78 $513.36 $1,540.08
    Tyres 1 Set Included $49.17 $590.04 $1,770.12
    Registration 3 Renewals Included $75.00 $900.00 $2,700.00
    Comprehensive Insurance Paywise (PRE) $175.24 $2,102.88 $6,308.64
    Fuel 0 ltrs per 100km Electric $50.00 $600.00 $1,800.00
    Fleet Management Fee $30.00 $360.00 $1,080.00
    Total budget $1,924.39 $23,092.68 $69,278.04

    On a 200k salary without Novated

    Income 200000
    Medicare 4000
    Tax 60667
    Total Tax 64667
    Take Home 135333

    On a 200k salary with Novated
    Salary 200000
    Less Car $23,092.68

    Post Salary $176907.32
    Tax 50522.7084
    Medicare 3538.1464
    Total Tax 54060.8548

    Take Home 122846.4652

    Total Tax Saving
    Per Year 10606.1452
    Per Term (3Y) 31818.4356

    Reduction in Pay
    Take Home Reduction 3Y
    Per Year 12486.5348
    Per Term 3Y 37459.6044
    Per Month 1040.544567
    Per Week 241.9871085

    Car Cost over Term (using reduced take home as the real cost)

    M 1040.544567
    A 12486.5348
    3Y 37459.6044
    Residual 35645

    Total 73104.6044

    after 3 years you have paid the same for the car, with free maintenance, rego, new tyres and 50$ a month charge credit

    • Kaz0551 on 26/11/2022 - 17:18
      +3

      Just make sure if you change job within 3 years, that your new employer can offer novated leases or you're f&^ked

    • tunzafun001 on 27/11/2022 - 16:58

      So they finally allow electricity instead of fuel?

      I asked in 2018, and it was like I was on another planet!

      Also, can you also package charging infrastructure in there yet? (Ie. You cant charge it without having the charger installed/ or an EVSE). Well, definitelty not in SA (bugger all chargers around here)..

      • Kaz0551 on 27/11/2022 - 18:14

        You can package the autopilot… So maybe the charger if it's sold as an accessory

        • tunzafun001 on 27/11/2022 - 20:51

          You'd hope so. I mean you cant get electricity into it any other way than using a charger, and if you can claim electricity…well… like tyres..kind of necessary.

          Wonder if you need a seperate circuit/ meter?

          • saltcheetah on 27/11/2022 - 20:56

            @tunzafun001: You can use normal outlets with an adaptor but it takes about 8 hours+ to fully charge. That’s what I remember from years ago.

            • tunzafun001 on 27/11/2022 - 21:00

              @saltcheetah: Yeah, the adaptor is an EVSE. But most wont have monitoring. So if you need something with a memory that spits out a number for declaring, then i recon it will need to wall mount installed.

              But either or… Can you claim either?

              • saltcheetah on 27/11/2022 - 21:03

                @tunzafun001: Ah gotcha. Good point!
                If you have a calculation of the wattage per hour and the price per watt you could probably give it to your accountants and they would accept it as a estimate. Probably talking tens of dollar variances and I hope the ATO aren’t going to care.

                Can’t see why the whole lot of accessories can’t be included in the cost base of the car to get it ‘ready for use’.

    • saltcheetah on 27/11/2022 - 20:57

      Screenshot or shared sheet? This is super interesting if you could share :)

    • 50centscheaper on 28/11/2022 - 17:13

      I think the saving could be higher if you have factored in the $$ leaving in the saving / offset account as you don't have a pay it outright ?

      • Kaz0551 on 28/11/2022 - 21:37

        You'd gain about 4000 in interest (taxable) over the 3 years, so… maybe $2500 gain after tax over 3 years?

    • [Deactivated] on 14/01/2023 - 17:13

      Reduction in Pay
      Take Home Reduction 3Y
      Per Year 12486.5348

      sorry, i'm a bit slow here; how did it work out to be $12,486.5348 take home reduction per annum?

      don't worry. I've worked it out by looking at your formula. thanks!

      • Kaz0551 on 14/01/2023 - 17:24
        +1

        Compelling costs eh! My Y arrives in 2 months… I hope. Sadly I have to register my current petrol whore in feb :'(

        • [Deactivated] on 14/01/2023 - 17:25

          how did you calc Residual Value, Kaz?

          • Kaz0551 on 14/01/2023 - 18:16
            +1

            @[Deactivated]: The lease company provided that in the quote

            • [Deactivated] on 17/01/2023 - 10:44

              @Kaz0551: do you have ICE version of your calculator/spreadsheet, Kaz?

  • saltcheetah on 27/11/2022 - 01:09

    Am I the only one who is thinking salary sacrifice rather than leasing? Is it not possible with the exemption? It’s like salary sacrificing a laptop. But now you can do it for a car… it’ll take much longer.

    I guess you might need to say it’s mainly for work purposes and at the time of agreement it could be fully intended to be!

    • tunzafun001 on 27/11/2022 - 16:53

      Salary sacrifice is a lease arrangement.

      • saltcheetah on 27/11/2022 - 20:53

        Is it? Technically it could be I guess.

        Let’s talk a laptop. You pay $3k for the laptop and you have an agreed salary sacrifice arrangement. Company pays you back the $3k and then company deducts $2.7k from your pay ex gst. Otherwise deductible rule means there’s no FBT on the computer for the company. The computer is ‘yours’ but I guess the company did pay and charge you for it. Is that what you mean by lease?

        Apart from the fact you practically won’t be earning $80k a month (you could but most won’t be) but can’t you do the same for a car as a laptop since it’s now FBT exempt?

        • jace88 on 29/11/2022 - 23:26
          +1

          I think you should speak to a tax accountant.

          You've got some idea based on experience (eg. work-related portable electronic device exemption) but given the complexity of novated leases, FBT, etc… I think you may be better off getting professional advice to both understand what they are/how they work, and whether it is a good choice for you, rather than relying on information from OzBargain comments.

          • gakko on 21/12/2022 - 11:26

            @jace88: Annoying thing about that is that you speak to a tax accountant and there goes half your savings paying for the advice.

            • jace88 on 21/12/2022 - 13:21
              +1

              @gakko: I happen to be a CA so I just ended up speaking to myself :)

  • On1 on 28/11/2022 - 07:54
    +4

    @saltcheetah

    The whole FBT exemption thing is ONLY for novated leasing through a work arrangement.
    Its NOT so you can go out and buy a 70-80k car and then immediately deduct it against your income.

    • saltcheetah on 17/12/2022 - 00:12

      Actually:
      ‘Benefits provided under a salary packaging arrangement are included in the exemption.’

      Many people will need to do a novated lease.
      I’m explaining those capable and earn bucketloads can salary sacrifice a direct purchase of the car. No lease. It should result in tax savings.

      • mac2403 on 17/01/2023 - 14:24

        have you confirmed this?

      • shake on 03/07/2023 - 11:15

        @saltcheetah - just came across your comment here… I like your thinking, am curious as to whether this is actually do-able. ie purchase an EV outright as part of a salary sacrifice arrangement.

        Did you get anywhere with this, is it a thing?

        Would be great to hear your thoughts!

  • [Deactivated] on 04/12/2022 - 12:03

    It's incredibly stupid that this doesn't include serial hybrids.

    Cars with small on board engines that only act as a generator to power EV. We're talking 1.6l/100km. At the moment it's pretty exclusively nissan e-power, which is set to be introduced next year but can be imported now.

    Given Aus's total lack of charging infrastructure, private or public, and incapacity of grids to take that slack up in the next 5-10 years, this is an incredibly logical step that will vastly reduce both emmission and energy consumption, well above and beyond normal hybrids.

  • Your Friend on 18/12/2022 - 08:09
    +1

    is it possible to salary sacrifice a car without getting a lease?

    • seannami on 15/05/2023 - 20:53

      don't think so, but check with your employer?

  • phynicle on 22/12/2022 - 18:30

    I got my quote from leaseplan (only NL allowed by my employer), not very competitive, insurance (has to be with them) came up to be $3K a year.
    eg mdoel Y RWD, 3 year lease with $38K residual, ~15,000K/year, excluding fuel, came up to be $2K/month pre tax.

    Whats some of the better prices everyone else has seen? Maybe i can get Leaseplan to match.

    • Kaz0551 on 22/12/2022 - 20:02

      Paywise at about 1900/month with 36k residual

    • jace88 on 23/12/2022 - 08:51
      +1

      I went with sgfleet and you usually can choose your own insurance provider, but given the risk if the car is written off (which accelerates all the future payments which include interest) you may want the insurance which includes no gap for lease payments.

      The key thing is to look at the detail and differentiate between what is the financed cost/lease payments component, and any mandatory costs (eg management fee), and then the rest should either be fixed (eg registration costs) or budgeted amounts which you're free to play with (eg commercial charging, tyres/maintenance, carwash, etc). If you're trying to compare, only the lease payments/management fee are really comparable as the rest are based on budgeted amounts typically with reference to the estimated km (ie you can change) or are not really determined by the NL provider. Other aspects like residual are usually fixed based on ATO rules and lease length.

      FYI I'm paying about $2341 in monthly pre-tax for my 3LR in red, but I've increased the allowance (ie budget) for commercial charging & carwashes (total allowance circa $2k p/a). I've also elected to pay about $1k more for insurance over NRMA's comprehensive (with choice of repairer) and go through their preferred provider since they offer no gap on early termination of lease as a result of write off (lease payout protection).

      • eek on 15/05/2023 - 16:00

        Holy thread revival! Looking at a similar situation now with a different provider for a Model Y. My NL provider said they use Allianz so out of curiosity I went on the Allianz website myself and saw I could increase the insured amount to exceed the value of the new car and cover the entire early payout amount if I needed to pay it out early, in case it was written off. In this case, the NL provider said standard comprehensive insurance was $1.5K pa, plus another $200/m more for another policy to cover the gap between comprehensive and total financed value. Now my own quote came to $1.2K pa. to cover a RWD Model Y for $86K, which would cover the NL financed amount if I was to write it off on day 1. Does it sound like I'm missing something?

  • [Deactivated] on 15/01/2023 - 08:03
    Merged from Novated Leasing Electric Car (EV & PHEV) & FBT Exemption: What Is The Catch?

    Treasury Laws Amendment (Electric Car Discount) Bill 2022 has now passed both Houses of Parliament with two amendments from the Senate, and received Royal Assent on 12 December 2022.

    Part of this legislation that I'm particularly interested in is about exemption from Fringe Benefits Tax (FBT) for fringe benefits relating to electric cars (subject to certain requirements being met).

    I understand the move is part of government's wider initiative to decarbonize Australia hence increasing the uptake of EV/PHEV in Australia market.

    For us who want to take advantage of this offer, it is my understanding that we have to do it via Novated Lease.

    From what I'm reading, the impact to this legislation is almost all positives for us (employees) but sounds too good to be true. What are the catches? So far, I could only see these as the potential risks:

    • From 1 April 2025, a plug-in hybrid electric vehicle (PHEV) will not be considered a zero or low emissions vehicle under FBT law; as for EV, the exemption will only valid up to 30 June 2025. This means from that point onwards, EV/PHEV will no longer be considered as FBT exempt therefore employees will start to contribute in Post-Tax Deductions to help offset the cost of any FBT payable (again which means we're back to square one after 3 years with less take home pay).

    • Although the private use of an eligible electric car is exempt from FBT, employers will still need to include the value of Reportable Fringe Benefits Amount (RFBA) on the employee's payment summary if your novated lease is set up without Post-Tax Deductions. I believe this is relevant if you have a FEE-HELP debt, Centrelink (e.g. Family Tax Benefit A or B), child support or if you have no private health (hospital) insurance and you earn above an income threshold(currently $90,000 for an individual or $180,000 for a family). However as ATO is still assessing on what is to be included as part of this RFBA, there is a risk that employees may have to pay lump sump payment during your tax return?

    • EV/PHEV significantly lose their market value therefore your residual (balloon) payment is higher than the value of the vehicle when it’s due. This scenario is always a possibility even though less likely but still a risk.

    I won't touch on the overall risk of Novated Leasing (such as employees being retrenched etc) as they're already part of Novated Leasing (with or without this legislation, with or without Electric Vehicles).

    Apology for the long-winded per above but can you think of any other catches specific to Novated Leasing EV/PHEV & this new legislation or perhaps if you disagree with any of the above? Happy to be corrected.

    • Kaz0551 on 15/01/2023 - 08:56

      Your answer is here https://www.ozbargain.com.au/search/node/Fbt%20type%3Aforum

      • May4th on 15/01/2023 - 09:45
        +1

        where? i don't see any number crunching or in depth in discussion in the other threads

        • pegaxs on 15/01/2023 - 09:55
          -1

          Could try the thread over on Whingepool

          • May4th on 15/01/2023 - 10:13

            @pegaxs: ah trust whirpool to do it right

        • Kaz0551 on 15/01/2023 - 10:17

          Being facetious or serious? https://www.ozbargain.com.au/node/741106

          • [Deactivated] on 15/01/2023 - 10:21

            @Kaz0551: we know it's not half price & not after Novated Lease calculation (thank you Kaz for your spreadsheet template) as a result of FBT exemption. This topic is created to seek people's advice from different perspective.

          • May4th on 15/01/2023 - 10:47

            @Kaz0551: i was going to say there's only 1 or 2 helpful posts from kaz and jace the rest is fairly lacking on the details and then realised you are kaz!

    • 87percent on 15/01/2023 - 11:10
      +1

      When VicRoads ditches, or at least a reconsider, the EV road user charge, then I’ll consider getting an EV

      • boomramada on 15/01/2023 - 11:22

        More like adding more.

      • brendanm on 15/01/2023 - 12:15

        Disconnect odo, winning.

    • paddyo on 15/01/2023 - 11:22

      I must admit, I looked at all the links but still could not make head nor tail of it. I am, by my own admission, not the best when it comes to financial quotations. If I understand correctly, buying an EV now on Novated Lease will be financially helpful because you will NOT (?) have to pay any post tax payment? How?
      I have been using a NV vehicle/s for 15 years now and like the simple way of accounting for them and all inclusive maintenance/fuel/insurance etc. I am well aware that I could make some savings by other methods but I'm lazy and go for the simplest. I do source my own insurance and some maintenance providers but the rest I just go with the flow.

      • [Deactivated] on 15/01/2023 - 11:43
        +1

        buying an EV now on Novated Lease will be financially helpful because you will NOT (?) have to pay any post tax payment? How?

        I am by no means an expert in the topic but from my understanding, the reason why post-tax deduction exists in the normal arrangement (non-FBT exempt) is to help offset the cost of any FBT payable on the novated lease. In my last leasing agreement, it was automatically arranged as such and appeared in our payslip in Post-Tax Deduction. I don't know if it is possible to not do Employee Contribution Method (ECM) therefore $0 Post-Tax Deduction but I assume it will result in a hefty lump sump payment during your tax return as you need to pay out the FBT in a single go.

        Going back to your question, there will be no Post-Tax Deduction for EV/PHEV for up to mid-2025 because there is no FBT to offset.

    • g27s2 on 15/01/2023 - 12:26
      +1

      Hey, so I looked into this and even got a preliminary quote through my employer's novated leasing provider. Summary is that if you're looking into novated leasing then this exemption makes leasing significantly cheaper. Problem is that it is still significantly more expensive than buying outright and benefits people who are in the top tax bracket. The use case I can see for novated leasing is if you urgently need a car such that you can't save up cash to buy outright and are in the top tax bracket. The traditional other benefits such as maintenance costs being included are a moot point for EV cars due to not requiring the usual amount of maintenance as ICE, as well as no pre-tax saving on fuel. Also caveats of being with your employer or transferring to an employer that has salary packaging benefits - an early termination of contract means you pay it all post-tax which will incur a large loss.

      I didn't go ahead with it because the numbers didn't add up and except for a Tesla model 3, the immediate financial availability of the car doesn't fix the overall supply of EV cars. Lastly the finance rate is laughable, they hide it well but my loan rate would be close to 12%. I've had a colleague look to another provider that came down to 8% so it is possible to shop around but the legislation is really aimed at employers who regularly buy large fleets of cars rather than employees.

    • Taro Milk Tea on 15/01/2023 - 17:12

      At the end of the day, novated lease company still needs to make money. Thought FBT might be exempted, they will increase the fee somewhere else..which in this most likely will be the interest rate.

      Cash will still be the best option,but I guess if you have high salary and want to take advantage of the tax deduction though novated arrangement, maybe it's worth it.

  • cathalm8 on 01/02/2023 - 21:43

    Hey does anyone know if getting one of these novated leases will end up reducing childcare rebates?

    • Kaz0551 on 01/02/2023 - 21:43
      +1

      They will NOT reduce the money you pay.
      They will neither increase or decrease the rebate.

      Childcare, medicare and private health are all based on your "actual adjusted taxable income" which doesn't include deductions like salary sacrifice.

      • cathalm8 on 01/02/2023 - 22:04

        Ok so it definetly wont impact childcare cost rebates in any way? I read this article from PWC (https://www.pwc.com.au/tax/employment-taxes/deep-dive-fbt-sp…) and some others which suggest things like:

        "The additional RFBA of the vehicle is likely to be a large add-on to an employee’s relevant “income” calculation, which could result in an unforeseen large lump sum payment at tax time"

        Articles like that seem to imply that it could impact somehow?

    • Kaz0551 on 01/02/2023 - 21:44
      +1

      I tried last financial year. I was thoroughly disappointed.

      • cathalm8 on 01/02/2023 - 22:06

        The chilcdare rebate concern is the one thing holding me back from this as I think it makes sense if you are in the top tax bracket?

  • Kaz0551 on 01/02/2023 - 22:36
    +1

    My understanding is that it adds back on. After salary sacrifice your salary is 150,000 instead of 180,000 for example. Then the FBT benefit is added back so your reportable income is still 180k

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