Buying a car is a big decision, and with the rising cost of living, it’s something many of us are taking extra care to consider. This feels especially true for EVs. They’re exciting, innovative, and good for the planet but let’s be honest, the high upfront costs and the way their resale value drops can make you pause.

That’s why so many eco-conscious drivers are choosing subscription models. They’re flexible, easy, and let you enjoy a low-emission vehicle without the long-term commitment.

But what if subscriptions aren’t quite what you’re after? If you’ve fallen in love with a particular EV and can see yourself driving it for years to come, a Novated Lease might be exactly what you need. With a Novated Lease, you can drive your dream EV for a set term and decide at the end if you want to buy it. For those of us who form bonds with our cars (it’s okay, we get it), this can be a great option.

Still, life isn’t always that simple, right? What happens if the lease is up, and you’re torn? Maybe you love the EV but aren’t ready to commit. Should you extend the lease, buy the car, or explore something new? Don’t worry, we’re here to help you figure it out.

No matter what stage of the journey you’re at, we’re here to make the road to sustainable driving as smooth and stress-free as possible. Let’s make it work for you!

What Are Novated Leases?

Let’s break it down, novated leases are a real game-changer, especially if you’re looking for a smarter way to manage car costs. Think of it as a “salary sacrifice” arrangement with your employer that bundles all your vehicle expenses like repayments, fuel, registration, and maintenance into one neat package. These expenses are then deducted straight from your pre-tax income.

The best part? You lower your taxable income and take care of all your car costs in one go. It’s simple, efficient, and saves you money on tax.

Here’s how it works:

Imagine you earn $70,000 a year before tax, and your car expenses are $10,000 annually. With a novated lease, your taxable income drops to $60,000. That means you’ll pay less tax while enjoying the convenience of having all your car costs sorted automatically.

It’s easy to see why 5% of all new cars in Australia in 2022 were financed through novated leases. And as more people discover how straightforward and cost-effective they are, that number’s only growing.

Sound like something that might work for you? Let’s explore the possibilities together!

Save Thousands by Leasing an EV

Leasing an electric vehicle (EV) through a Novated Lease isn’t just about driving greener, it’s about driving smarter for your wallet. Imagine rolling all your car expenses into one simple payment, reducing your taxable income, skipping the GST, and never worrying about buying a car outright. Sounds good, right?

Here’s the game-changer: EVs come with some incredible perks. 

Since July 1, 2022, EVs have been exempt from Fringe Benefits Tax (FBT). That’s a tax break you don’t want to miss, especially when traditional vehicles used personally under salary sacrifice can rack up FBT rates as high as 47%—a cost often passed on to employees.

But not with EVs. If your vehicle meets these criteria, you’re in the clear:

• It’s a low- or zero-emission vehicle.
• It was purchased and used on or after July 1, 2022.
• It’s driven by you or your family members.
• It’s priced under the luxury car tax threshold.
• Speaking of thresholds, here’s some good news: for the 2024/25 financial year, the luxury car tax limit for low- and zero-emission vehicles has jumped to $91,387 (up from $80,567).

What does that mean for you? Let’s break it down. Leasing a $71,000 Tesla Model Y could cost less per year than leasing a $56,000 Toyota Hybrid. Even with interest on your EV lease, the tax savings stack up, making an EV the clear winner financially.

With interest in EVs doubling since these changes came into play, now’s the time to make the switch. Ready to save thousands and drive smarter? The future is electric—get started today!

Buying an EV: A Better Long-Term Solution?

Sure, the Fringe Benefits Tax (FBT) exemption makes leasing an EV through a Novated Lease sound like a no-brainer but is it really the best option for the long haul? Let’s dig a little deeper.

What’s Not Covered?

While a Novated Lease bundles most costs, it doesn’t cover everything. For instance, if you’re planning to charge your EV at home, you’ll need to foot the bill for installing a home charger yourself. And that’s not exactly pocket change.

Even though you won’t pay FBT, you’ll still need to report those benefits to the tax office. This could impact other parts of your financial life, like your eligibility for private health insurance rebates, parental leave payments, childcare subsidies, or even your student loan repayments. Plus, some state government EV incentives aren’t available through a Novated Lease, meaning you could miss out on extra savings.

Who Can Use a Novated Lease?

Here’s another catch: a Novated Lease is only available to salaried employees. If you’re self-employed, you’ll need to find a way to declare yourself as an employee of your own business to qualify.

And what happens if you switch jobs? That’s where things get tricky. Your employer handles the lease payments, so if you leave, you’re left managing them yourself until you find another employer that supports Novated Leases. If you can’t, you’ll have to keep making the payments on your own, renew the lease, or even sell the car.

Why Buying Might Be Better

If you can handle the upfront costs, buying an EV outright might save you more in the long run. Sure, leasing spreads out your payments and comes with perks, but ongoing interest payments can add up quickly.

When you buy, you pay a fixed amount upfront, which means no worrying about interest piling up or job changes throwing your lease into chaos. Plus, there’s something comforting about knowing the car is completely yours, with no strings attached.

Leasing can be a great option for some, but if you’re thinking about long-term financial peace of mind, buying might just be the smarter move. At the end of the day, it’s about finding the option that works best for you.

To Buy or Not to Buy?

At the end of the day, the decision to buy or lease comes down to what’s best for you, and it’s worth putting some thought into it. Can you handle a big upfront payment and say goodbye to interest payments? Do you have your heart set on a specific car, or have you gotten attached to the one you’re currently driving? Are you about to switch jobs or go down the self-employed path? And what about those EV incentives—are any of them only available through a Novated Lease? If that’s the case, buying your EV at the end of your lease term might be the right choice for you.

But hey, if the thought of paying a large lump sum makes you a little nervous, staying with a Novated Lease might feel like a safer bet, especially if you’re not planning to switch jobs soon and the interest payments still fit comfortably into your budget.

Still unsure? No problem! Feel free to reach out to one of our carbar business specialists. We’ll chat through your options and help you figure out what’s best for your situation.