Sarah sat in her car park at lunch, scrolling through three browser tabs, a BYD listing, an MG brochure and a Tesla configurator, trying to work out which electric car would actually leave more money in her pocket each fortnight.
Her workmate had mentioned something about a tax exemption on EVs through work, but nobody could explain what it actually meant in dollars. If that sounds familiar, you are exactly who this article is for.
Why A Novated Lease Changes The EV Equation Completely
Most people compare EVs the way they compare petrol cars, by sticker price alone. That approach misses the biggest financial lever available to Australian employees right now.
When you buy an electric vehicle through a novated lease, part of your payment comes out of your salary before tax is calculated. Your taxable income drops, you pay less income tax, and because the vehicle is bundled with a fringe benefits tax exemption, none of that saving gets clawed back the way it would on a petrol car.
This is not a small technicality.
For many salaried Australians, running an EV through a novated lease rather than paying cash or taking a standard car loan can mean thousands of dollars back in their pocket every year. It also explains why EVs, which often looked expensive next to a Corolla a few years ago, are now genuinely competitive once you run the real numbers rather than just the drive away price.
The FBT Exemption Explained Simply
Here is the part that actually matters: eligible battery electric and plug in hybrid vehicles priced under the luxury car tax threshold are exempt from fringe benefits tax when packaged through a novated lease.
Basically, the government has removed one of the biggest hidden costs that used to make salary packaging a car less attractive. Combine that with the pre tax income splitting a novated lease already offers, and you get a genuine double benefit that petrol and diesel vehicles simply cannot match.
State governments also chip in with reduced or waived stamp duty and registration discounts on eligible EVs in several states, though these concessions have been narrowing as EV sales have grown. The federal FBT exemption remains the biggest and most consistent saving, and it applies no matter which state you live in.
Dilemma One: I Want The Cheapest Possible Entry Point
If your priority is simply getting into an EV for the lowest possible weekly commitment, the BYD Atto 1 is currently the benchmark. Priced from $23,990 driveaway for the Essential trim, it holds the title of Australia's most affordable new electric vehicle.
On a novated lease, a car in this price bracket typically works out to a modest weekly deduction once running costs like insurance, servicing and charging are bundled in, often comparable to what someone might already be spending on fuel and upkeep for an older petrol hatch. It suits city driving, short commutes, and anyone who wants to try EV ownership without a large financial commitment.
The tradeoff is range and cabin space. The Atto 1 is a compact city car first and foremost, so if you regularly drive long distances or need to carry passengers comfortably, it is worth test driving before you commit your salary to it for the next three to five years.
Dilemma Two: I Want Something A Bit Bigger Without A Big Jump In Repayments
This is where the MG 4 earns its reputation. Starting around $31,990 driveaway, it steps up in range, offering more than 400 kilometres on a full charge along with genuinely enjoyable rear wheel drive handling that punches above its price point.
For someone who wants a proper hatchback with real everyday usability, not just a city runabout, the jump from an Atto 1 to an MG 4 on a novated lease is usually only a moderate weekly increase, yet the improvement in range, comfort and resale confidence is significant.
Many Australians in this bracket are choosing the MG 4 as their first real family capable EV, especially those who occasionally drive between cities or want the peace of mind of a longer range battery without stepping into luxury SUV pricing.
Dilemma Three: I Want The Car Everyone Talks About And I Am Willing To Pay More
The Tesla Model Y remains the best selling electric car in Australia for good reason. It offers a spacious, practical interior, strong resale value and access to the extensive Tesla Supercharger network, which removes a lot of the range anxiety that puts new EV buyers off.
Pricing starts from around $58,900 before on road costs for the rear wheel drive variant, climbing higher for Long Range and Performance versions, so driveaway figures typically land somewhere between the mid sixties and high eighties depending on the variant and your state.
On a novated lease, some providers currently advertise Model Y weekly repayments starting from around $160, though your actual figure will depend heavily on your salary, your state, the specific variant you choose and your chosen lease term.
Because the Model Y sits comfortably under the luxury car tax threshold in most configurations, it still qualifies for the full FBT exemption, which is a major part of why it remains so popular with novated lease customers specifically, not just cash buyers.
How To Actually Decide Between Them
Rather than picking a car based on brand reputation or what a colleague drives, run your own numbers against your own salary. A $23,990 BYD Atto 1 and a $58,900 Tesla Model Y will produce very different weekly deductions, but the gap after tax savings is often smaller than the sticker price difference suggests, because higher income earners see larger pre tax benefits on the more expensive vehicle.
This is exactly why guessing based on price tag alone leads people astray.
The smartest approach is simple: plug your real salary, your preferred lease term and your shortlisted vehicles into a proper novated lease calculator before you talk to a leasing consultant.
That way you walk into the conversation already knowing your realistic weekly cost, your estimated annual tax saving and whether the residual value at the end of the lease makes sense for how long you plan to keep the car.
Comparing Specs Before You Commit
Price is only part of the decision. Range, charging speed, warranty length and cabin space all affect whether a car suits your actual life, not just your budget.
If you want to compare every fully electric model available in Australia side by side, including range, dimensions and pricing, the EVDB Australia Comparison Tool is a genuinely useful independent resource for narrowing your shortlist before you test drive anything.
Choosing an EV through a novated lease comes down to one truth: it is not just a lifestyle decision anymore, it is a financial one, and often a very favourable one.
Whether you land on the budget friendly BYD Atto 1, the well rounded MG 4, or the class leading Tesla Model Y, the FBT exemption and pre tax salary packaging structure mean you are very likely to come out ahead compared with a straight cash purchase or a standard car loan. The only real mistake is guessing your numbers instead of calculating them properly before you sign anything.
Ready to see your savings?