Drive an eligible electric vehicle with before-tax savings
For eligible electric vehicles, the federal FBT exemption introduced in 2022 means there is no FBT payable on the lease. The benefit is still reportable on your payment summary, but the structure works harder for an EV across the life of the lease compared with a petrol equivalent. The page below covers how it works, the eligibility rules, and the cars that qualify.
The exemption
Reportable, but not payable
The FBT exemption applies to the personal use of eligible electric vehicles provided by an employer or financed through a novated lease. Most novated leases have a portion of the running cost paid from post-tax salary to offset Fringe Benefits Tax. For eligible electric vehicles, no FBT is payable on the lease. The benefit is still reportable on your payment summary (which can affect government benefits like HECS), but the lease itself runs without an FBT charge. Consider obtaining financial advice regarding the potential impact on your personal circumstances and any means-tested government benefits. The exemption was introduced under the Treasury Laws Amendment (Electric Car Discount) Act 2022 and applies to eligible EVs first held and used after 1 July 2022. A federal policy update is gradually scaling the FBT exemption back: from April 2026, EVs priced above $75,000 attract FBT at a discounted rate (75% of standard); from 2029, all EVs are subject to FBT at that discounted rate; luxury EVs above the LCT threshold and some older or used EVs continue to attract full FBT.
The ATO is the authority on the rules. See FBT and electric cars at ato.gov.au, and for plug-in hybrids see FBT on plug-in hybrid electric vehicles at ato.gov.au.
What qualifies for the exemption
The exemption is specific. Three things need to be true.
Eligibility checklist:
- The vehicle is a battery electric vehicle (BEV) or hydrogen fuel-cell electric vehicle (FCEV). Plug-in hybrid electric vehicles (PHEVs) had separate treatment that ended for new arrangements on 1 April 2025.
- The retail price is below the luxury car tax threshold for fuel-efficient vehicles (indexed annually; we check the current figure before any quote is finalised).
- The vehicle was first held and used after 1 July 2022.
Worth knowing:
- The PHEV exemption ended on 1 April 2025 for new arrangements. Existing PHEV leases established before that date keep the exemption for the life of that lease.
- Reportable Fringe Benefits Amounts may still apply to some assessments (HECS, Family Tax Benefit, Medicare Levy Surcharge). Talk to your accountant if those affect your situation.
- The luxury car tax threshold is updated each year; we check it against the car you're considering before quoting.
How the structure works for an EV
The exact figure depends on your salary, the car and your kilometres. The structure works harder for an eligible EV in two ways.
Where the structure works harder:
- The whole lease payment is drawn from pre-tax pay, with no post-tax FBT contribution. The benefit is still reportable.
- On eligible new EVs under the luxury car threshold, GST is not payable.
- Running costs are typically lower than a petrol equivalent. Electricity costs less per kilometre than fuel; servicing items are fewer.
The fastest way to see your indicative figure is the calculator. Pick the EV you've got in mind, then add your salary; it returns a regular figure (weekly, fortnightly or monthly to match your pay) and an indicative comparison against a petrol equivalent.
What's bundled into your regular payment
An EV novated lease bundles the car and most of what it generates over the term, the same way a petrol-vehicle lease does. Electricity replaces fuel; servicing rhythms are lighter, reflecting EV maintenance patterns.
Included as standard:
- Finance on the car (ex-GST on eligible new EVs)
- Electricity charging costs (viaa fuel card /or home charging reimbursement, depending on your setup per FBT year)
- Scheduled servicing (fewer and lighter than on a petrol car)
- Replacement tyres for the term of the lease
- Registration
- Comprehensive vehicle insurance
Optional add-ons:
- Accident management
- Roadside assistance
- Home charger purchase and installation (a separate cost outside the lease)
FAQs
Common questions
Want to see your indicative EV numbers?
Run the calculator to see how an eligible EV novated lease compares with your current arrangement. Or tell us the EV you've got in mind: we'll come back with a quote