Electric Vehicle (EV) FBT exemption. 

Electric Vehicles (EVs) that were first registered on or after 1 July 2022, and have never been subject to Luxury Car Tax (LCT), qualify for the generous FBT exemption.

The benefits of salary packaging an EV are enormous, as 100% of the finance and running costs are deducted from the employee's salary Pre-Tax ie 100% tax deduction.

In addition to the huge tax savings, there are several other significant benefits and savings; 

1) There is a GST credit off the vehicle purchase price (up to a cap of $6,334). This directly reduces the financed amount, and

2) The is a 100% GST credit on any GST paid on running costs (eg, insurance, CTP, maintenance,  tyres)

3) You can include and claim the cost of charging at a commercial charging station (using actual receipts), or, you can use the short cut method by claiming 4.2 cents per kilometre annually, for the period between 1 April and 31 March of the following year.

*If you have an existing novated lease on a Plug In Hybrid Electric Vehicle PHEV, set up between between 1 July 2022 and 31 March 2025, you will continue to enjoy the EV FBT exemption until your lease ends, or until there is a significant change to the lease (including change of employer). 

The ATO have stated that a change of employer on or after 1 April 2025 will cause the end of the FBT exemption for that PHEV. The new employer must determine the FBT base value of the PHEV and treat it the same as a petrol of diesel vehicle in respect to FBT, so there will still be savings.

These rules for PHEV vehicles do not apply to EVs.

Non electric vehicles

Non electric vehicle continue to enjoy the savings that have been available for decades including;

1) Big PAYG savings

2) There is a GST credit off the vehicle purchase price (up to a cap of $6,334). This directly reduces the financed amount, and

2) The is a partial GST credit on any GST paid on running costs (eg, insurance, CTP, maintenance, tyres)

Do I need to use my car for business purposes?

No. Novated leasing is primarily used by corporate and government employees who have NO business use at all.

You do not need any business use and you do not need a log book etc.  

What are the savings?

  • Fleet Discounts on many makes and models of new vehicles
  • No GST on new, used or demo vehicles purchased from a dealership with a Tax Invoice
  • Novated leasing reduces your taxable income. This reduces the amount of income tax your employer deducts from your pay
  • You enjoy GST savings on the vehicle running costs

What vehicles can I novate?

  • Any make or model of new Car can be novated 
  • Demonstrator cars
  • Used cars subject to generous age, kilometre and purchase price restrictions
  • Even the car you are driving right now can be converted into a novated lease in most cases, subject to age, kilometre and value limits

What is included?

  • Finance
  • Fuel or charging
  • Servicing
  • Comprehensive insurance
  • Registration & CTP
  • Tyres
  • Roadside assistance
  • Any other agreed running costs you incur to keep your vehicle in good, roadworthy condition.

How do I arrange insurance?

PFM Fleet offer maximum choice and flexibility. You insure your vehicle through any insurer as normal and we include a budget for insurance to cover the annual premium payments.

How do I pay for fuel?

For maximum convenience and choice, we issue you with a fuel card that is accepted by over 90% of service stations across Australia. 

How do I pay for servicing and tyres?

You choose where you'd like to service your car and buy tyres. The service provider emails the invoice to accounts@pfmfleet.com.au and we pay them directly. 

In cases where this is not possible you simply pay the service provider then email the receipt to the same email address and we will promptly reimburse your nominated bank account. 

What happens if I am spending more or less money than budgeted?

Your vehicle fund balance will fluctuate from time to time in line with your expenses. If for any reason, at anytime, you are over or under spending, we can quickly and easily modify your payments to get you back on track by lease end.

At the end of the lease, PFM reconcile your actual expenses against budget. Any surplus funds are returned to you via your payroll department. Or if your fund is overdrawn, payroll will make a final pre tax deduction as required to bring your balance back to $0.

Under this model you only pay for what you actually use and any savings are directly to your benefit.

What is a Residual?

A residual value or balloon payment, refers to a sum of money payable at the end of the lease term. The residual is set up front so the employee knows exactly what the amount is before entering into the lease arrangement. At the end of the term the employee has several choices to address the residual

  1. Extend the lease for a further term by refinancing the residual
  2. Payout the residual and keep the car
  3. Trade the car in and use the proceeds to clear the residual

Why do I need to have a residual?

The ATO require that a novated lease have a residual. They also legislate the minimum residual % allowable and we must work within these guidelines.

What happens if I change employers?

The primary relationship in a novation agreement is between the employer and leasing company.

If you leave your employer, PFM must cancel the novation agreement and reconcile the maintenance fund with payroll.

A novated lease is transportable by nature, so you should approach your new employer to discuss transferring your novated lease to them and have it managed by their chosen fleet management company.

In the unlikely event that your new employer does not allow novated leasing (very rare) you can simply set up a Direct Debit to pay the finance repayment (without running costs) directly to the financier via your nominated bank account, without making any changes to the lease.

You also have the option of requesting a payout figure at any time, for any reason and paying the lease out entirely. 

Who regulates Novated Leasing?

A novation agreement is an ATO approved arrangement. The ATO has guidelines and legislation around novated leasing and we have extensive knowledge and expertise around this legislation.