EV vs ICE Novated Leases: What’s the Difference?
With more Australians considering electric vehicles (EVs), one question we hear regularly is:
” Is a novated lease different for an electric vehicle compared to a petrol or diesel vehicle?”
The short answer is yes! and for many employees, an EV can offer significantly greater tax advantages.
Let’s explore the differences.
Electric Vehicles (EVs)
Eligible EVs can qualify for the Australian Government’s FBT exemption, making them one of the most tax-effective vehicles available through a novated lease.
Potential benefits include:
- Greater tax savings through eliminated FBT
- Freedom to choose from a wide range of new and used vehicles
- Reduced running costs thanks to lower charging and maintenance expenses
- Access to pre-tax salary packaging for eligible vehicle costs
For many employees, this means they can drive a newer, higher-specification vehicle for a similar—or sometimes even lower—out-of-pocket cost than a comparable petrol vehicle.
Petrol and Diesel (ICE) Vehicles
Internal Combustion Engine (ICE) vehicles remain a popular choice and can still deliver substantial savings through a novated lease.
Employees benefit from:
- Pre-tax salary packaging awakening tax savings
- Predictable budgeting with most running costs included
- Freedom to choose from a wide range of new and used vehicles
However, unlike eligible EVs, traditional petrol and diesel vehicles are not eligible for FBT exemptions, which can reduce the overall tax advantage.
Which Option is Right for You?
The right choice depends on your lifestyle, driving habits and personal preferences.
An EV may suit you if you:
- Drive predictable daily distances
- Have access to home or workplace charging
- Want to maximise available tax savings
- Prefer lower ongoing running costs
A petrol or diesel vehicle may still be the better choice if you:
- Frequently travel long regional distances
- Require towing capability
- Prefer traditional refuelling convenience
- Need a specific vehicle not yet available as an EV
Ready to Explore Your Options?
Whether you’re considering your first electric vehicle or comparing it with a traditional petrol or diesel model, Kooya can help you understand which option delivers the greatest value for your circumstances.
Speak with one of our novated leasing specialists today and discover how much you could save.
