Buying an electric vehicle (EV) doesn’t just help the environment, it could also save you money on taxes. Thanks to a government tax break introduced in 2022, more Australians are taking advantage of novated leases to make EV ownership more affordable. If you’re considering an EV and need finance, we work closely with a car finance specialist who helps all Mynt Financial customers find the right loan structure to make it happen.
What is a Novated Lease?
A novated lease is a financing option where an employer, an employee, and a leasing company enter into an agreement to purchase a car. Payments for the car, and often running costs like insurance, registration, servicing, and charging, are deducted from the employee’s pre-tax salary, reducing taxable income and providing significant tax savings.
At the end of the lease term (usually around four years), there is a residual (or balloon) payment due. Many people opt to roll into a new lease rather than pay out the remaining amount.
How Does the EV Tax Break Work?
The Australian government introduced an exemption from Fringe Benefits Tax (FBT) on certain EVs purchased through a novated lease. This means employees can enjoy extra savings when financing an eligible EV.
To qualify for this tax break:
- The car must be fully electric, hydrogen fuel cell, or a plug-in hybrid (until March 31, 2025).
- The car’s price must be below the luxury car tax threshold ($91,387 for fuel-efficient vehicles in the current financial year).
- The car must be purchased under a novated lease.
How Much Can You Save?
Industry experts estimate that this tax break can save EV owners thousands of dollars. For example:
- On a $60,000 EV, the FBT exemption could save around $5,000 per year.
- The price difference between an EV and a petrol car is typically $15,000 to $20,000, but with the FBT exemption, you can afford an EV for a similar weekly cost.
Is a Novated Lease Right for You?
While novated leases can be a great way to save on tax and manage car costs, they are considered commercial agreements and are not regulated under consumer credit laws. It’s important to fully understand the terms, fees, and potential hidden costs before committing.
A novated lease may be suitable if:
- You want to reduce your taxable income and maximize tax benefits.
- You’re looking for a convenient way to package your car costs into a single pre-tax payment.
- You have stable employment and your employer offers novated leasing as an option.
Will the Tax Break Last?
The government is reviewing the impact of the EV tax exemption, and while there is no immediate plan to remove it, future changes are always possible. The scheme is set to be reviewed in 2027, but any updates could be influenced by political changes and budget priorities.
If you’re considering an EV, now is the time to act while these savings are still available.
How We Can Help
At Mynt Financial, we work with a trusted car finance specialist who looks after all our customers, helping them secure the best financing options for their EV purchase. Whether you’re interested in a novated lease or other financing solutions, we can connect you with the right experts to structure your loan and repayments in a way that works for you.
Want to explore your options? Reach out to us today, and we’ll guide you through the process to make your EV dream a reality!
Disclaimer: While every effort has been made to ensure the accuracy of this information, changes may occur, and individual circumstances vary. Some states may have different regulations. We recommend speaking with a qualified finance broker and your accountant to determine what options are best for you.
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