EV FBT exemption
Explore the key eligibility considerations for electric vehicles
Save more with a Novated Lease on an Electric Vehicle (EV)
The Federal Government's Electric Car Discount could help you unlock thousands in extra tax savings on an eligible EV. If your vehicle qualifies and is financed through a novated lease, 100% of your lease payments and eligible running costs can be paid from your before-tax salary, thanks to the Fringe Benefits Tax (FBT) exemption.
Which cars are eligible for the EV FBT exemption?
For a new arrangement under the current rules, the car must satisfy all relevant conditions:
- It is a battery-electric car or a hydrogen fuel-cell electric car.
- It was first held and used on or after 1 July 2022.
- It is used by, or available for the private use of, a current employee or their associate.
- No luxury car tax (LCT) was payable when the car was first sold or imported. For 2026–27, the fuel-efficient vehicle LCT threshold is $91,661, but the threshold alone does not confirm that no LCT was payable.
Plug-in hybrid electric vehicles generally stopped qualifying from 1 April 2025. A limited exception can apply where use was already exempt before that date and a financially binding commitment to provide the vehicle continues without an optional extension or renewal.
An exempt benefit can still contribute to your reportable fringe benefits amount. That amount is not taxable income, but it can affect some income tests and obligations. These rules are date- and vehicle-specific, so Autopia confirms the proposed car and arrangement rather than relying only on its advertised price or powertrain.
Your top electric vehicle questions answered
What stays the same (for now)?
- No changes up to and including 31 March 2027
- Eligible electric vehicles remain fully-FBT exempt under the current rules
- Novated leases established on or before 31 March 2027 are grandfathered, meaning they’re not affected by the proposed future changes
- Import tariffs on eligible EVs remain removed
- No GST on the purchase price^
^ GST is not payable on the purchase price of a vehicle financed through a novated lease (GST savings are calculated on the FBT base value of the vehicle, up to the claimable limit [$6,353 in FY 2026-27] unless exempt).
What will change over time?
The Government has outlined a phased approach from 1 April 2027.
- Phase 1: 1 April 2027 – 31 March 2029:
- Eligible EVs priced at $75,000 or less remain fully FBT‑exempt
- Eligible EVs priced at above $75,000 but below the Luxury Car Tax (LCT) threshold receive a 25% FBT discount
- Phase 2: From 1 April 2029:
- Eligible EVs below the LCT receive a permanent a 25% FBT
These changes are designed to keep EVs affordable, sustainable and widely available – and means novated leasing remains one of the best ways to own an EV.
Is this definitely happening?
The Government has made it very clear this is their intention. However, the announced changes still need to be legislated in Parliament. We will keep you updated on any changes.
What is the difference between a novated lease of a petrol vehicle and a novated lease of an EV?
When you take out a novated lease for a petrol vehicle, you still receive substantial savings, including no GST on the purchase price and tax savings on the finance and the running costs of your vehicle (petrol, insurance, maintenance etc).
However, under the Electric Car Discount, these savings are substantially increased when you take out a novated lease for an eligible EV. This is because the EV will be fully exempt from Fringe Benefits Tax.
What is Fringe Benefit Tax?
When you take out a novated lease for a petrol vehicle, you still receive substantial savings, including no GST on the purchase price and tax savings on the finance and the running costs of your vehicle (petrol, insurance, maintenance etc).
However, under the Electric Car Discount, these savings are substantially increased when you take out a novated lease for an eligible EV. This is because the EV will be fully exempt from Fringe Benefits Tax.
What can I claim?
Eligible vehicle running costs may include electricity used to charge the car, scheduled servicing and maintenance, replacement tyres, registration and CTP, comprehensive insurance, car washes and detailing, and roadside assistance.
See our “What’s included” page for more information.
Can I claim the cost of wall chargers and other charging accessories?
A home wall-charging station and its installation are not exempt associated car expenses, so they cannot be packaged as FBT-exempt vehicle running costs. Most new EV’s will be provided with a charging cable as part of the vehicle purchase and you are able to claim the replacement of a charging cable if it is a like for like replacement and not an upgrade in charging technology.
Confirm the treatment with Autopia before purchasing charging equipment or accessories.
Am I eligible for government incentives if I get my car with a novated lease?
Government incentives vary by state or territory and can change, close or exhaust their funding. Some programs exclude salary-packaged or novated-lease vehicles, while others apply different ownership, price, delivery or application conditions.
Check the current rules with the responsible state or territory authority before relying on an incentive.
How do I claim an EV rebate?
Where a current rebate is available and a novated-lease vehicle is eligible, follow the application process published by the relevant state or territory authority. Autopia does not administer government rebate programs and cannot guarantee that an application will be accepted.
How does the budget work?
Your lease budget estimates the eligible running costs of your vehicle over the lease term, including items such as registration, servicing, tyres and electricity charging. These costs are then spread across regular payroll deductions.
Because the budget is an estimate, your actual costs may be higher or lower than forecast. Your budget balance is reviewed regularly and, if needed, adjustments can be made with you and your employer to help keep your budget on track.
You only pay for the eligible costs you actually incur under your novated lease arrangement.
Does an electric vehicle need to be serviced?
Yes. Electric vehicles generally have fewer moving powertrain parts than petrol or diesel vehicles, but they still need servicing and safety checks in line with the manufacturer's schedule.
And because servicing is in your running cost budget, you’ll receive tax savings on it.
