EOFY Financial Planning: Key Tax Deductions and Benefits of Financing EVs

With the End of the Financial Year (EOFY) looming large, businesses across Australia are gearing up to optimize tax gains and get financial planning in order. One of the most effective ways to do so is to invest in assets, specifically electric vehicles (EVs), that bring both tax advantages as well as long-term environmental benefits. With the 2025 updates to EV incentives and tax regulations, there is no better time to act prior to EOFY. This blog discusses some of the main tax deductions and how EV finance and other asset finance solutions prior to EOFY can save businesses money and enhance their environmental profile.

Understanding the EOFY and Its Importance for Businesses

The EOFY is similarly significant for business since it is financial year closure and when businesses can look at financial performance, reduce tax bills, and plan ahead for the next year. The EOFY is when businesses can best take tax deductions and rebates by making purchases that are financially and operationally beneficial to them.
For businesses that want to invest in new assets, such as cars or equipment, EOFY presents a unique opportunity. Some of the most sought-after options include purchasing electric vehicles (EVs), which have become well-liked not just because they are eco-friendly but also because of the tax advantages available for businesses to utilize.
As of April 1, 2025, Australia has introduced new news to the EV market, including altering the Fringe Benefits Tax (FBT) and implementing state-based rebates. This is more conducive time for businesses to switch to EVs.

Key Tax Deductions for Asset Purchases

One of the major ways that businesses can reduce their taxable incomes is through deducting assets. The Australian Taxation Office (ATO) offers several incentives for companies to invest in business assets, including cars and machinery.

1. Instant Asset Write-Off Scheme

For small to medium-sized businesses, the scheme for the immediate write-off of assets is a method by which businesses can claim an immediate deduction in the value of assets purchased before the EOFY. The threshold has fluctuated over recent years, but under the current rules, businesses have the option to claim up to $150,000 in value per asset. This can be for a range of assets including cars, machinery, and technology.
For organizations which need to purchase an EV, this proposal can result in significant tax reductions. Companies can claim the complete expenditure of the EV purchase (within the limitation) by purchasing an electric vehicle prior to the end of the financial year, thus reducing their tax payable and ultimately their taxable income. Organizations can also consider EV funding arrangements to fund the upfront cost of EV purchases.

2. Depreciation and Capital Allowances

If your business is not entitled to the instant asset write-off or prefers claiming the deduction over several years, you can still claim depreciation against assets, including cars. EVs are entitled to the same depreciation treatment as other cars, allowing companies to claim a percentage of the cost of the asset each year.
Also, capital allowances can be deducted on assets in order to reduce the tax paid over a term. Firms can claim an annual percentage of depreciation or make use of diminishing value, which provides a larger deduction in early years of life of the asset.

3. Government Incentives for EVs

Besides tax credits, organizations purchasing electric cars can be eligible for government incentives that will encourage the utilization of EVs. Though the incentives vary by states, they commonly entail rebates, discounts, or grants to purchase EVs and charging points. Discounts in registration fees for EV owners in certain states also exist.
By financing an EV, businesses can take advantage of these incentives and reduce the upfront cost and enjoy the tax deductions mentioned above.

Financing Electric Vehicles: A Smart Choice for EOFY

Not only do companies stand to gain from investment in an electric vehicle (EV) through tax relief, but there are long-term cost benefits and environmental gains as well. With government incentives, lower fuel and maintenance costs, and mounting consumer pressure to be sustainable, EVs are an increasingly plausible choice for companies to replace fleets. However, purchasing an EV in full may not always be affordable. Meet EV finance.
In financing an EV, businesses have several different alternatives that include commercial EV finance, chattel mortgages, hire purchase agreements, and novated leasing. Each of these alternatives has benefits and is best suited to various business needs:

• Chattel Mortgage: This option allows businesses to own the vehicle but finance it through a loan. The interest on the loan is tax-deductible, and the asset can be depreciated over time, offering instant tax relief.
• Hire Purchase: Under hire purchase, firms pay for the EV in instalments, with the potential of owning it after the duration. It is appropriate for firms intending to pay for the car over time while accumulating depreciation allowances.
• Novated Lease: A novated lease allows firms to lease the vehicle on behalf of employees, with payments generally made through salary packaging. It is a viable choice for companies that want to provide EVs to employees while benefiting from tax incentives.

By utilizing commercial EV finance and other asset finance solutions, businesses can free up cash flow, avoid large upfront costs, and still benefit from the financial and environmental benefits of switching to an EV.

Steps to Take Before EOFY

To ensure that your business is making the most of the EOFY tax benefits, follow these steps:

• Make Your Purchase Early: Aim to purchase any assets, including EVs, before EOFY to take advantage of the instant asset write-off. This will ensure that the deduction is applied to this financial year.
• Consult with a Financial Advisor: Discuss with a financial advisor to discover the best finance for your business. Whether you decide to purchase, lease, or finance the purchase, a professional can help you determine the best way to minimize your taxes.
• Keep Records: Always ensure that you possess the correct records of the purchase and financing agreement because you will need this information to counter tax against it.
• Review Government Incentives: Look up your state government to learn whether there are any additional incentives for purchasing an EV. The incentives can lower the initial purchase price and increase the economic benefit of purchasing an EV even further.
• Plan for Future Expenses: If you are planning to invest in other assets, then it is the right time to plan your future expenses and prepare early for the next EOFY.

Conclusion

As EOFY draws close, businesses have a golden opportunity to reduce their tax liability and invest in assets that will deliver long-term gains. Paying for an electric car provides not just financial and environmental advantages but also enables businesses to maximize EOFY tax depreciation. With the new progress being made with FBT exemptions and rebates at state level, 2025 represents a unique opportunity for businesses to achieve cash savings, replace the fleet, and invest in going green.
Act now and take advantage of these EOFY deals and opportunities and put your business in a great position for success next year!