Are people doing this?
Basically using your old ICE running cost to lease an EV for less than an extra $1,000 a YEAR due to EV FBT exemption (or free if you are in a higher tax bracket or get a Tesla even)
And you get to keep the sale of your ICE car?
Only MORE money per year, what a bargain!
The example shows a $14k cash after paying the residual - I did my numbers and it works out extra savings when earning more than $60k a year (because after-tax impact is less for the lease) and you actually can get more than 5% if you park it in the offset account (more like 6.5%)
As a true OZBargainer, never buy an EV just for the $$$$ “savings”. I drive an EV for the convenience (refuel from home, no regular service requirements) and for the superior driving experience (instant torque); knowing full well I’m paying more than if I drove an ICE.
Does the corgi like it?
You get a new car after 5 years for less than $1,000 a year extra, rather than being stuck with an old car worth less and less every year…and it's not a scheme, it's an ATO FBT exemption for EVs under the LCT.
Plus $11k residual
.
which you pay off with just part of your ICE car sale that you locked away or offset your mortgage with (and you would have depreciated that much from the ICE car anyway after 5 years)
The FBT exemption only applies to those taking out a novated lease, so you just need an employer who provides this and for you to be continuously employed for the lease term.
doesn't most employers allow that these days?
Does yours? That's all that matters.
definitely - it just sounded too good to be true, so I thought I asked the ozb think tank.
@bargainshunta: It's not the most economical transport solution but could work for someone otherwise planning to finance a $50K+ EV.
Not just novated lease. Can be a business supplied vehicle to an employee, not a lease as such.
Yes, but then the benefit is gained by the employer. OP appears to be talking personal finance.
I SaW iT On yOUtUbE … mUSt Be FaCt
In fairness, they aren’t blindly believing it and are asking for advice
Don’t know about that particular deal but you can also claim some of your home electricity and don’t forget no scheduling servicing (at least on the Tesla).
isn't that only because you use it for work purposes - I thought novated lease doesn't require it to be a work purpose (just needed your employer to agree to it)
Stopped watching when I saw that you lease an MG. Lol.
Don't forget you need to pay tax on that interest earned at 32.5%.
Do the figures include the cost of electricity to charge the EV?
this was the other surprise! I had a friend showing me that it cost him less than $150 for 11,000km in a year. I spent that on two full tank of petrol!!!
Apparently there are free EV chargers around the place - new to me too.
Your friend must spend all of their free time at Westfield. No thanks.
There's this great new invention called solar. I've had my EV for just on 12 months now, haven't paid 1 cent for charging (apart from missed FIT which is a crappy 5.5c now anyway for me) as I charge solely at home from solar. Sure, not everyone can do that but if you can you're laughing.
@drewbytes: How much did the solar installation cost and what % of that would you allocate to the car?
I just bought a model Y using novated lease. It cost $20k per annum pretax paid lease that covers extras such as insurance, rego, tyres, maintenance etc. and $24K residual which basically squeals to 5 years of extras i mentioned above.
Not including petrol savings. this cost about $20k salary sacrifice. So ATO pays some from your tax suppose to be paid. Higher your income it’s better savings.
You are missing the fact that it takes a lot of acrobatics for very little gain.
$6600 to run existing car, plus you need to earn $1250 and EV running cost is $8k+
How does it cost $6600 to run an existing car that is sold at $25k. If you got a Corolla Hybrid it is a $35k car. $205 per year fixed price servicing. Fuel probably (15k/km service interval, 4L/100, $2 a litre, $1200). If it is a 10 year life you're looking at $4905 + $1k rego + $1k insurance. So about $7k. What is the extra $1k to run an EV?
It is a $1k per year punch in the guts?
I have a 3.6l v6 Holden ZB currently :-)
FWD or AWD?
Sold the tyres as they couldn’t afford the petrol
its not for any car, I am talking about a model Y. $2.5 is just insurance. add rego… and maintenance and tyre change with 5 years. and you dont have to use it.. if you dont it is deducted form your residual payment
I can't tell if you included it, but the extra $1000 "running" on the EV would be covering the finance cost. On pure running cost an EV will win hands down- so its a car on finance vs a car you already own. Rough running calculation on current EV vs my previous ICE hybrid was:
Power/fuel (home charging): EV: $9.72/ charge 0-100% (off peak tariff, down much further with super off peak and assuming no free work charging). Mine gets 300km/charge so 3.2c/km. ICE: $81/tank at $2/l fuel = 10.8c/km. Charge while I sleep so no time to account for. Used a 750l tank and 5.4l/100km which is what the Prius was at in the end.
Insurance: EV (taken before tax) $190/month. ICE $170- though insurance I had on the Prius was lower teir than the NVL one, can't calculate equivalent properly because there are fleet benefits on the EV. Going around 1500kms/month atm, so let's say 12c/km for both to assume equivalence in the maths (and for when the lease runs out).
Servicing: EV fixed price every 2 years but roughly comes out to $400/annum. Prius dealer service was between $300 and $600 / annum depending on what got done. At 15000kms/ annum, 37c/km for both on average roughly.
Rego: Normally I wouldn't include it, but this is Victoria where EV policy goes to die. EV gets slapped with a 2.8c/km tax (I'm not going to bother about the $100 rego discount, Prius got it too until this year, and it was gone by then).
NVL ends in 5 years, saving the residual adds $107/fortnight BUT all costs except charging and Victax are paid per-tax. Not going to worry about consumables etc since it's assumed both cars use those the same for the sake of maths.
Since we used the same numbers for insurance, servicing and primary rego, scrub those for the comparison (plus those are all pre-tax on the EV, so hard to make equivalent). Running is basically fuel vs charging + Victax. Say 15k km/ annum. $900 for the EV and $1620 for the ICE.
If you only did public FAST chargers (BPPulse for arguments sake, 55c/kw), the charging does go up to 10c/km + Victax, so actually isn't cheaper. This would mean EVs aren't great if you can't charge at home or cheap/free at work for the moment.
My ICE sold for $11k (not mine to sell and they accepted a lowball, so I got none but let's assume I did). If the EV is with me to the same age as the ICE (13yrs), that's $9360 saved just from being an EV, so the Prius sale netted a grand total of…$1640. And 5 years of EV running costs are pre-tax for the lease I'm on. So on their extra $1000 maths, the financing cost $1720/annum essentially. Admittedly this isn't what mine is working out to for the moment (it'll drop as I save into the offset for the residual), but it still saves a ton vs financing a new non-FBT free car.
Maths are very quick and dirty, might be off a few bucks here and there but it (hopefully) gives a rough idea of what I'm getting in my experience.
many thanks.
Just did the maths on super off peak- I'm getting a wallbox put in (no solar) so I can charge in the 4 hour block pretty easy. Super off peak, the EV costs 1.98c/km, bringing yearly running costs only charging at home and doing 15000kms a year to $717 including Victoria (ZLEV) tax. All you people in other states have it easy. If your tariff is similar (11c super off peak) its only $297/year to power the thing
Another perspective- including parking, my work and back commute including a large detour to carpool with a colleague costs $8.80 charging off peak. The train would cost $10
You sound too excited by this. Don’t get carried away and end up stuck with something that costs $1k per year more than current spending.
Might sound good, but might also be a bit of a con for clicks and likes.
Yep. And almost every answer they get , the OP bats away. Defending a scheme that they are asking for opinion on.
I say go for it OP. Come back and tell us the pitfalls later.
Just get a Dodge RAM. The planet's screwed anyway
planet was and will never be screwed, its the humans who will be. Planet has seen far greater catastrophies before and recovered, it will recover from current tiny one as well.
OK, so no-one got the drift?
"as far as human survival, the planet is screwed ,anyway"
Pay more and no longer own your assets = bargain LOL
Yep. When you run short of money and you’ve got a lease, you lose the car and have nothing. When you run short of money and you’ve bought it, you sell the car and buy a cheaper one.
It's all about optics.
My friends see me in my new ev therefore I must be successful and care for the environment. Lol.
If it’s a NOVATED lease (which it will be for the Electric Vehicle to be exempt from Fringe Benefits Tax), you own the car. If the NOVATED lease arrangement breaks down, you keep the car and have to pay the remaining finance on the car like you would with a normal loan.
The difference between a NOVATED lease and a normal loan, is you pay the NOVATED lease with pre-tax income (thereby decreasing your taxable income), and you pay the normal loan with post-tax income. You own the car in both cases.
Mine is working out to around $4000/annum more than my Prius (partly because I didn't get the sale money for the Prius, so nothing added to offset, and I barely ever used the Prius. It also wasn't on finance), though that will improve as I save the residual and that goes into offset instead. Without watching the video, I can see how it could get down to $1k/annum more without too much of a stretch, depending mainly on how much the ICE running costs were. I do drive the EV much more than I did the Prius, but my NVL company doesn't cover power from home chargers. Plus charging on being essentially $8 a "tank" (so $20 to get Prius equivalent distances, give or take and if I don't get free charging at work) while the Prius took around $50-70/tank really does help…
That 4k includes the money put aside for the residual as well, so even without offset and any future evening out, that's only $20k for the car proper over 5 years (in very rough and crummy maths) for a $47k car.
thanks for sharing the experience.
What does AI say?
What does artificial insemination have to do with this debate?
Well, having a child is a lot like having owning a car. They both cost you more money than expected, especially when unforeseen maintenance comes up, but can also bring a lot of joy if you didn't get a dud.
That makes sense. Cheers
It only makes sense if you were already planning on buying a new/expensive vehicle.
If you have a 10-20k banger like me, then its cheaper to keep your current vehicle.
"10-20k banger"
My daily cost $400 at beginning of covid
.
And its now a 10-20k banger
This sort of internet scheme gets you in trouble with the ATO