The Federal Government has announced changes to the Fringe Benefits Tax (FBT) concessions for electric vehicles (often accessed via novated leases). In short, the current full FBT exemption will be wound back over time and replaced with a permanent 25% FBT discount for most eligible electric cars from 1 April 2029.
Unpacking FBT EV Changes
The changes are being introduced in stages, with eligibility based on the car’s value (and whether it is under the fuel‑efficient Luxury Car Tax (LCT) threshold). The Government has also indicated that existing arrangements will be ‘grandfathered’ meaning you generally keep the rate that applied when your lease/arrangement started.
Electric cars valued at or below $75,000 that are provided before 1 April 2029 are expected to continue to receive a 100% FBT discount.
Vehicles above $75,000 (but not exceeding the fuel‑efficient LCT threshold) for electric cars provided between 1 April 2027 and 1 April 2029, the Government proposes a 25% FBT discount. In practical terms, this is delivered by reducing the statutory formula rate to 15% (instead of 20%).
Electric Vehicle FBT Changes From 1 April 2029:
A permanent 25% FBT discount is proposed for all eligible electric cars valued up to and including the fuel‑efficient LCT threshold (again, via a 15% statutory formula rate). The standard 20% statutory rate will continue to apply for all other cars, including electric cars that exceed the fuel‑efficient LCT threshold.
What does this mean for you?
If you’re considering a novated lease soon: timing and vehicle price will matter. Vehicles at or below $75,000 are expected to remain the most concessionally treated up to 1 April 2029.
Talk to a tax or finance expert about leasing an EV
If you’re weighing up an EV through salary packaging, we can help you model the after-tax cost under the proposed settings (including how the $75,000 price point and the fuel‑efficient LCT threshold may apply to your preferred vehicle). The BlueRock Finance team can also secure you great rates on novated leasing. Submit the form below and we'll connect you with the right expert.
