MYOB update means up to 250,000 workers could get cheaper electric cars

As many as 250,000 Australian workers could unlock significant electric vehicle discounts after a change to small business software that will automate car leases.

The change, from accounting platform MYOB, could help more than 100,000 businesses offer cheaper electric vehicles to an estimated 250,000 employees, with workers saving an average of $10,000 a year in tax.

The MYOB launch comes after the federal government cut fringe benefits taxes on many electric and plug-in electric hybrid vehicles in November last year, triggering unprecedented demand in novated leases.

Novated leases allow employees to pay for cars using pre-tax dollars but are typically only offered by large businesses due to the administration required.

MYOB product head Steve Price said the new feature would automate the process of offering a vehicle lease to an employee, including setting up ledgers and creating payroll deductions.

Price said the software firm hoped automating most of the process would let more small businesses offer car leases as an employee benefit, saving workers thousands of dollars.

“We’re estimating the average employee would save about $6000 a year by having a novated lease but for electric vehicles it’s even higher – we estimate about $10,000 under the new legislation,” he said.

“Novated leasing can provide a more cost-effective way to start that journey.”

Under the Electric Car Discount Bill, passed in late November, employers are no longer required to pay fringe benefits tax on the lease of electric or plug-in hybrid electric vehicles costing less than $84,916.

More than 30 electric cars qualify for the discount, including models from Tesla, BYD, MG, Hyundai and Kia.

The tax cut triggered a rush on novated car leases, with Eclipx Group reporting a 60% rise in inquiries following the change.

MYOB employee Michael Holt said he took out a novated lease on a Tesla electric vehicle this year after calculating he could save as much as $53,000 over the course of a six-year lease.

Holt said the potential saving allowed him to purchase his “dream car”.

“Owning a Tesla wouldn’t have been an option for me without the novated leasing plan so it really opened the door to a premium vehicle,” he said.

Sales of battery-powered cars have risen significantly this year, with a report from the Electric Vehicle Council finding Australians bought 46,624 electric cars in the first six months of 2023, representing 8.3% of all new cars sold.

Australia had about 130,000 electric cars on its roads in July, it found, with 180,000 expected by the end of the year.

This article was first published by AAP.