Save $1000s on an electric car

EV novated lease: Save even more with $0 FBT

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Novated lease electric car discount explained

If you get an eligible electric vehicle (EV) or plug-in hybrid electric vehicle (PHEV) through a novated lease, you could save thousands of dollars more than you would with a non-EV or if you’d paid for exactly the same car another way.

This is because eligible electric car novated leases are exempt from fringe benefits tax (FBT). It means you can pay for 100% of the cost of the lease, including packaged running costs, using pre-tax salary.

How it makes an EV novated lease cheaper

Here’s what the Australian Federal Government’s Electric Vehicle Discount policy means:

  • EVs and PHEVs valued up to the luxury car tax threshold ($89,332 in FY 23/24) are exempt from FBT.
  • The exemption applies to passenger vehicles that can carry a load of less than one tonne.
  • Used cars are eligible if they were first used after 1 July 2022.
  • For eligible PHEVs, the exemption applies to novated leases that commence before 1 April 2025.
  • As well as the cost of the car itself, related car running costs are also exempt from FBT. That means charging costs, car insurance, registration, servicing and tyres.

This policy has had a significant impact on EV sales in Australia already, with 98,429 EVs and PHEVs sold in 2023 compared to 39,437 in 2022.

Save on EVs with a novated lease

Example electric vehicle savings with a novated lease

EV Novated leaseBuy outrightCar loan

Vehicle cost (Tesla Model 3 RWD)

Vehicle price




GST saving on vehicle




Income & tax deductions

Annual income




Annual novated lease costs including running costs (pre-tax)




Annual taxable income




Annual income tax saving




After tax costs

Annual after-tax car loan repayments (7.50% p.a. interest)




Annual after-tax car running cost




The outcome

Net cost of novated lease (after tax)




Residual payment




Total cost of paying for car & running costs over 5 years




Cost difference



* Calculation is based on a driver in NSW with an annual gross salary of $120,000 driving 15,000km per year. Running costs include: electricity, comprehensive insurance, registration and CPT, servicing and tyres. Pricing is accurate as of January 2024. For this example, the car loan interest rate is assumed to be 8.00% p.a. with no loan fees. This is an example for illustrative purposes only based on the assumptions described. Your cost and savings may be different depending on your situation.

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List of EVs and PHEVs eligible for $0 FBT through a novated lease

The list above is based on vehicles with an estimated cost below the luxury car tax threshold, as at February 2024. On-road costs, such as dealer delivery, standard and statutory warranties, accessories, modifications and treatments to the car before it's delivered may impact the cost for the purpose of working out luxury car tax, according to the ATO.

The most popular EVs being novated in 2024

The Tesla Model Y is the clear favourite among Aussie EV drivers. But there are several other brands making an impact, both at the more affordable and premium ends of the market.

Here are the some of the most popular EVs Novated Lease Australia’s customers are choosing:

Tesla Model Y Novated Lease Australia

The most popular PHEVs being novated in 2024

For drivers looking for a more gradual transition to an electric vehicle, these are the plug-in hybrids proving popular with our customers:

To learn how much more you can save with a novated lease speak to one of our team today.

Sorrento  GT NLA
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Commonly asked questions about an EV novated lease

FAQ questions

Your EV novated lease will involve a single regular salary sacrificed car payment made directly from your pre-tax income by your employer. This payment will cover the cost of leasing the car, plus:

  • Charging costs
  • Comprehensive car insurance
  • Vehicle registration
  • Servicing
  • Tyres
  • Car washes
  • Charging cable (if required)

If the vehicle you are leasing is eligible for an FBT exemption, your related running costs will also be exempt from FBT, according to the ATO.

You can claim back charging expenses using the Novated Lease Australia driver portal. There are a few ways you can do this:

  • If you incurred the expense at a public charger, you can simply upload your receipt and the cost will be refunded to you from your car-running budget.
  • If you use a home charger, you can upload a power bill and indicate what portion of the bill is accounted for by charging costs for the vehicle you are leasing.
  • Or you can simply claim 4.2 cents per kilometre you drive by uploading a picture of your odometer.

According to the ATO, you cannot cover the cost of a home-charging station for your electric vehicle through a novated lease. Likewise, a replacement battery or car charger that significantly improves the performance of your vehicles cannot be included.

You also cannot cover ongoing costs that are not required to keep your vehicle on the road, including car parking costs, tolls or fines.

Your EV novated lease term can be set for any duration between one and five years. With Novated Lease Australia, even ‘odd’ terms are allowed, i.e. not a full year (e.g. 30 months).

Our consultants can talk you through what your choice of lease term could mean for your costs, as well as any other implications.

When the term ends on your EV novated lease, you will have the option to:

  • renew your lease for a new term with the same EV or PHEV (continuing the tax benefits)
  • upgrade to a new vehicle by starting a new novated lease agreement
  • pay the residual to own the car outright and continue to drive the same vehicle (the novated lease tax benefits will end at this point)

When deciding what lease term is best for you, bear in mind that there are some key dates for the Electric Car Discount policy coming down the track:

  • Only leases on PHEVs that commenced before 1 April 2025 will be exempt from FBT. If you extend an existing lease on the same vehicles after this date, this will be considered a new lease and will not be exempt from FBT, according to the ATO.
  • The Government has said it is due to review the overall policy by mid 2027.

This may be possible but will depend on what state or territory you live in and what specific rules and exemptions are applied to the EV incentives available there. You can check our EV incentives guide for details or check directly with your local state or territory Government. Our expert consultants are located all across Australia and can also offer information on what incentives you may be eligible for beyond the novated lease electric car FBT exemption.

Popular EV and PHEV brands Australians are novating


Written by

Bevan Guest - NLA CEO


Bevan Guest

Reviewed by

Sean Callery Editor Novated Lease Australia


Sean Callery
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