In three to five years those vehicles will flood the secondary...

First 21701 Last

Share
Profile

Follow
Langford

605 Posts.

186

24/03/24

08:15

Post #: 73030207
Share

Originally posted by gememde: ↑

Salary packaging tax break sends EV demand rocketing
ByJohn Collett
March 12, 2024 — 12.00pm

Listen to this article
4min

The tax break on salary sacrificing for higher-priced electric vehicles (EVs) and plug-in hybrids, which took effect in 2022, has helped to foster a big increase in the number of these vehicles that are salary-packaged.
They now make up about 40 per cent of all new novated leases, says the National Automotive Leasing and Salary Packaging Association. That is up from about 1 or 2 per cent before the change.
The extension of tax breaks to higher-priced electric vehicles, such as the Tesla Model Y, that are salary-packaged has helped boost sales.
“Our members are reporting robust growth in novated lease sales, particularly as a result of the government’s EV Fringe Benefits Tax (FBT) exemption and greater EV model availability,” says Rohan Martin, the chief executive of the association.
FBT is no longer applied to EVs that have a purchase price of less than $84,916. Plug-in hybrids up to the same purchase price are also FBT exempt, but only up to April 1, 2025.
Advertisement
The maximum price has since been adjusted and is now $89,332. FBT had previously made it not worthwhile to package expensive cars.
EDITOR'S PICK
Opinion
Hip pocket
Want to pay less tax? This sacrifice could be worth making
Dominic Powell
Money Editor
An exemption from FBT means the employee’s taxable income is reduced by the whole amount that is paid for the car from pre-tax pay.
Cars are packaged through a novated lease – a three-way contract between the employee, the employer and a specialist salary packaging company, which also arranges the finance.
At the end of the lease term, which is usually three to five years, the employee either leases the same vehicle again or upgrades to a new car with another lease.

Advertisement
Employees who retire or leave their employer before the end of the lease, or whose lease ends, pay the “residual”, which is the final lump sum payment to take full possession of the car.
Not all employers offer salary packaging of vehicles. While many large employers offer packaging, many mid-sized and smaller employers do not. More are expected to now offer packaging, given the FBT exemption.

Expand

In three to five years those vehicles will flood the secondary market, driving the entry price for EV ownership lower as new has to compete with good second hand options. This can only be positive, IMO!

LTR Price at posting: $1.21 Sentiment: Buy Disclosure: Held
9 Upvote

0 Great analysis

Reply