FBT Exemption on Novated Leases a Win for Electric Vehicle Drivers
Since it became law in 2022, the Federal Government’s Electric Car (EV) Discount has helped drive significant uptake of zero and low-emission vehicles – from less than two percent to double figures.
The Discount, which includes an exemption of paying Fringe Benefits Tax (FBT) on eligible electric vehicles (EVs), has also encouraged car manufacturers to import and supply more affordable electric models in Australia.
As one of Australia’s leading novated leasing providers, we’re all about supporting our customers to take advantage of the FBT exemptions while minimising their environmental impact.
Government EV Incentive Under Review
We also work closely with industry leaders to ensure customers are up to date on EV government incentives as they evolve – including Luxury Car Tax (LCT) threshold increases, the removal of plug-in hybrid vehicles (PHEVs) from FBT exemptions, and now, in 2026, the government review of the EV Discount.
The review officially runs from 6 February 2026 and due to report by mid 2027 – but a decision on altering, continuing or ceasing can happen at any time during this timeframe.
Discover more about the EV Discount review here.
The FBT Exemption Explained
The Electric Car Discount applies to eligible zero-emission vehicles that are held and used on or after 1 July 2022. It includes an exemption to paying fringe benefits tax (FBT) on eligible EVs that fall below the luxury car tax threshold of $91,387.
These include battery electric vehicles and hydrogen fuel cell electric vehicles, as long as the vehicle is first held and used from 1 July 2022.
Plug-in hybrid electric vehicles (PHEVs) became ineligible for the FBT exemption from 1 April 2025. Those on pre-existing leases were deemed still eligibleuntil the end of their lease, so long as a commitment was made before 1 April 2025. However, any changes to the lease thereafter that necessitated a new financially binding agreement would render that PHEV ineligible. (You can read more about PHEV eligibility and broken financial commitments here.)
The FBT exemption only applies to the personal use of electric cars operated by businesses – or financed under a novated lease.
This means that a novated lease on an EV differs from that of a fuel-powered vehicle, because there is no post-tax component to deductions.
Separately, the government also removed the 5% import tariff exemption that applied to some imported EVs.
It’s important to note that employers will need to include FBT-exempt electric cars as a reportable fringe benefit on an employee's payment summary. We recommend you seek financial advice on what impact this could have to your personal circumstances, including means-tested government benefits.
How Much Could the EV Discount Save You?
The potential FBT savings could be even higher for more expensive EV models – costing up to the $91,387 luxury car tax threshold for fuel-efficient vehicles – and could further complement the benefits of novated leasing.
While the legislation is expected to deliver more affordable EVs, it is also worth noting that electric cars may be cheaper to run and maintain, making them even more attractive to potential drivers. By way of example, Nissan estimates that a NSW commuter can save $30 a week by switching from a petrol car to its Leaf model.
The discount, complementing the many benefits of novated leasing, could be a great way to make your money work for you.
Leading the EV Novated Leasing Charge
Maxxia is one of Australia’s largest novated leasing providers, servicing thousands of employees each year across a wide range of sectors all over the country.
This longevity means we know novated leasing and the benefits salary packaging a car can bring, and we’ve helped thousands of Australians get behind the wheel of a brand-new EV while saving on tax.
The adoption of EVs has evolved quickly, and we maintain our vision to be the partner of choice in supporting our customers’ transition to low and zero-emission vehicles in Australia.
Have you considered an electric or hybrid for your next car? Give us a call on 1300 123 123 and put our expertise to the test.
Let Us Help You Stay Informed
At Maxxia we believe EV educational information is important. We will continue to work with industry groups such as NALSPA (National Automotive Leasing and Salary Packaging Association) and the Electric Vehicle Council, the national body for the electric vehicle industry in Australia, to provide you with the latest EV updates, including those from the Federal Government’s National EV Strategy.
If you’d like to know more about the ins and outs of electric vehicles, how novated leasing works with an EV and any other commonly asked questions, check out our website here.
* Sourced from TREASURY LAWS AMENDMENT (ELECTRIC CAR DISCOUNT) BILL 2022
