Changes coming for the Electric Vehicle FBT exemption

On the 5th of May 2026, a joint media release by the Hon Jim Chalmers and the Hon Chris Bowen confirmed the phasing in of the following changes to the Electric Vehicle FBT exemption;

The changes will be brought in progressively through three phases and are estimated to save the Budget $1.7 billion over the five years from 2025-26.

1) In the first phase, the existing electric vehicle discount will continue in full until the end of March 2027.

2) In the second phase, between 1 April 2027 and 1 April 2029, the full FBT discount will continue to apply only for EVs costing $75,000 or less – encouraging manufacturers to offer more affordable choices to the Australian market.

During this phase, EVs costing more than $75,000 but below the luxury car tax threshold will receive a 25 per cent discount on their payable FBT.

3) In the third phase, from 1 April 2029 onwards, all EVs below the luxury car tax threshold will receive the 25 per cent discount on payable FBT.

Existing leases won’t be impacted by the changes.

Why Novate?

Novated Leasing is equivalent to an instant payrise, it is a fantastic staff benefit that is used by smart employees to stretch their pay further.  

For example the average tax saving on a vehicle that is not an FBT exempt EV is on average around $3,000 - $5000 per annum.

On an FBT exempt EV this increases to around $8,000 - $10,000 per annum due to the 100% pre tax treatment.

These tax savings offset a large portion of the finance and running costs, bringing down the overall cost from net pay.  

About half of the vehicle's finance and running costs are deducted from the employee's pre tax salary. This reduces your taxable income and reduces the amount of (PAYG) tax payroll deduct from your pay, so you are saving tax no matter how much or how little you earn.

In addition to the ongoing tax savings, a Novated Lease also provides access to a GST credit of up to $6,334.00 off the vehicle purchase price up front + GST savings on the pre tax running costs, for the life off the lease. 

Anyone can Novate a vehicle. As long as you qualify for finance and your employer allows Novated Leasing you can access this incredible employee benefit. Most corporations and government employers offer novated leasing to help employee's maximise their remuneration.

Many people miss out on this incredible benefit due to the various myths and mis-information widely spread by well meaning "experts".  Our objective is to provide friendly, unbiased, quantified information, to help you assess and understand the product in it's entirety and enable you to make a well informed, intelligent choice about the best way to purchase and finance your vehicle.