Let’s say your fortnightly gross salary is $3,000. From that $3,000, the ATO deducts $670 in tax (22%), leaving you $2,330 to spend on your living expenses, including the vehicle.
If you finance a vehicle with the usual personal financing, you will be paying this and all running costs from the net $2,330 and still paying the full $670 of Tax.
The new legislation allows you to Salary Package the finance (a novated lease) and running costs before paying any income tax (and doesn’t add any new sneaky ones).
This is where a Novated Lease will package all the purchase, finance, insurance and running costs of your new EV up into one simple payment and be deducted before the above tax is taken out. In this example, you save by not paying 22% tax on vehicle costs, or more if you are on a higher tax rate.
And because these payments are salary packaged, you also don’t pay GST, automatically saving you an additional 10% (GST) on all vehicle costs including charging and service.