EV Australia

Deals · Novated lease

The FBT exemption: Australia's biggest EV discount, explained

Salary-package an eligible EV and the tax office effectively funds $4,000–$9,000 a year of your car. Here's how it works, who qualifies, and the traps that catch people at lease end.

Last verified: 5 October 2026 · Thresholds follow the ATO luxury car tax fuel-efficient limit; we update on every ATO change.

How it works in 60 seconds

  1. You lease, your employer pays. Lease payments and running costs (charging, rego, insurance, tyres) come out of your salary before income tax.
  2. Eligible EVs pay zero fringe benefits tax. For electric cars under the LCT fuel-efficient threshold ($91,387 in 2026–27) first held after 1 July 2022, the FBT that normally kills novated leases is exempt.
  3. The lessor claims the GST. That knocks roughly 1/11th off the effective purchase price.
  4. Net result: a mid-five-figure saving over a typical 3–5 year term versus buying the same car with after-tax income.

Novated lease & FBT exemption — rough numbers

Illustrative only — get a written quote. Assumes eligible EV under the LCT fuel-efficient threshold.

Est. tax saving / year
$4,471
via pre-tax salary packaging (FBT exempt)
GST saving on purchase
$5,355
input credit passed through by lessor

The traps (read before signing)

  • The residual is real. At lease end you owe the balloon payment — plan whether you're refinancing, buying out, or upgrading. Insurance write-offs mid-lease can leave a gap: see our insurance guide.
  • Reportable fringe benefits still show up. FBT-exempt ≠ invisible: the exempt amount appears as a reportable fringe benefit, which can affect HECS repayments and some income-tested benefits.
  • Changing jobs mid-lease is the classic pain. The lease follows you, not the employer. Know the payout figure before you resign.
  • Plug-in hybrids lost the exemption in April 2025 (existing leases grandfathered). Battery-electric only now.

Who benefits most

High-kilometre drivers (running costs are bundled pre-tax — the more you drive, the better it gets), PAYG employees whose employer offers salary packaging, and anyone cross-shopping a $50–70k EV against a $35k petrol car: the exemption can genuinely flip that comparison. Run your own numbers above, then get written quotes from at least two lease providers — pricing varies more than you'd think.

All EV deals State incentives EVs for rideshare (high-km drivers) The total-loss gap

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