Salary packaging & FBT

With a novated lease, your employer makes the lease payments on your behalf and deducts the cost from your salary.

For an eligible EV, those payments — along with eligible running costs such as registration, insurance, servicing and charging — can generally be packaged without the usual FBT applying.

Because you’re paying these costs from your pre-tax income, your taxable salary is reduced. Depending on your income, the vehicle and the lease arrangement, that can result in a meaningful tax saving compared with paying for the same car from your take-home pay.

Simple example: instead of earning $1,000, paying income tax on it and then using what’s left to pay for your car, salary packaging can allow eligible vehicle costs to be paid from that $1,000 before income tax is calculated.

The actual saving varies, so a novated lease isn’t automatically the cheapest option for everyone.

Under the current rules, a battery-electric vehicle can qualify for the FBT exemption if:

In practice, that means the car was at or below the fuel-efficient Luxury Car Tax threshold when first sold. That threshold changes from year to year.

Plug-in hybrids generally no longer qualify for new arrangements from 1 April 2025.

The FBT exemption isn’t available simply because a vehicle is electric.

If Luxury Car Tax has been payable on the vehicle, it won’t qualify for the current EV FBT exemption. This effectively puts a price limit on vehicles that can qualify, although the relevant LCT threshold can change from year to year.

ShortlistEV explains the FBT rules in plain English. Your salary-packaging provider or tax adviser should confirm eligibility for the particular vehicle and arrangement.

In May 2026 the Australian Government announced changes to the EV FBT concession. In September 2026 Treasury opened consultation on draft materials to implement those changes. This is not yet law — we’ll update this page if the final rules differ.

As announced:

Until 31 March 2027: eligible EVs continue to receive the current 100% FBT exemption.

From 1 April 2027: new arrangements for EVs valued above $75,000 would move to a 25% FBT discount rather than the full exemption. Eligible EVs valued at $75,000 or less would retain the full exemption.

From 1 April 2029: new arrangements for eligible EVs would move to a permanent 25% FBT discount.

Existing eligible arrangements are intended to be protected under transitional rules.

These changes are currently proposed rather than final law.

Even though an eligible EV may be exempt from FBT, your employer may still need to report a Reportable Fringe Benefits Amount (RFBA).

You don’t pay income tax directly on that amount, but it can affect some income-tested calculations and government obligations.

It can be — particularly if you’re in a higher marginal tax bracket — but don’t judge a novated lease on the tax saving alone.

Compare the total cost of the lease, including interest, administration fees, running-cost assumptions and the residual payment at the end, against buying the vehicle yourself.

The FBT exemption can make an EV considerably more attractive, but a poorly priced lease can still eat into those savings.

ShortlistEV’s role: we explain the rules. We don’t calculate your personal tax saving or provide tax advice. We don’t filter the shortlist on FBT.

Before signing a lease, confirm the numbers and eligibility with your employer, salary-packaging provider or tax adviser.