Guides

The electric car FBT exemption

Checked against the official sources on 20 October 2026.

A novated lease on an eligible electric car pays no fringe benefits tax (FBT). In the calculator's default example the exemption saves you $26,575 over 5 years. The rules depend on the car, its price and the day the lease starts.

What FBT is and why a lease pays it

FBT is a tax on perks an employer gives staff. A car you can use for private trips is one of those perks. The FBT rate is 47%.

In a novated lease your employer leases the car for you. The payments come out of your pay before income tax. The law treats the car as a perk from your employer. The employer passes any FBT back to you through the lease.

How FBT is worked out on a petrol car

The calculator values the car with the statutory formula. It is the ATO's fixed way to value a car perk. It takes a flat share of the car's price each year, however far you drive.

Taxable value = base value × 20% × days available ÷ days in the year − your post-tax contribution

• Base value. The price with GST and dealer delivery. Rego and stamp duty stay out.
• Days available. The days the car is there for you to use. A full year counts every day.
• Post-tax contribution. Money you pay toward the car from take-home pay.

On a $50,000 car the taxable value is $10,000 a year. You can cancel the FBT with a post-tax contribution of the same amount. The taxable value drops to $0 and no FBT is due.

The catch is that the contribution comes from pay you have already paid tax on. Your employer also keeps one eleventh of it as GST. An exempt electric car skips the contribution.

What the exemption saves

The example uses the calculator's default inputs.

• Salary. $200,000 a year.
• Car. A $50,000 electric car in NSW, charged at home for $765 a year.
• Lease. 5 years at 7.5% with a 28.13% balloon.
• Savings. Kept in a mortgage offset at 6%.
• Start. The lease starts on 20 October 2026.

Without the exemption you pay $10,000 a year from take-home pay. In return $9,091 less of the lease comes out before tax. You end up with $4,936 less a year.

Over 5 years that gap grows to $26,575 with the interest the money would earn. Total cost is how much less money you have at the end than with no car. The same car costs $91,546 on a car loan and $86,141 paid in cash.

Check your own car and salary in the calculator

Which cars qualify

An electric car on a novated lease is exempt from FBT when it meets every rule below.

• Battery electric or hydrogen. The car runs on a battery or a hydrogen fuel cell. A hybrid with a petrol engine doesn't count.
• First used on or after 1 July 2022. A used car first driven before that day doesn't qualify.
• Under the price limit. The price is under the luxury car tax threshold for fuel-efficient cars. That is $91,661 for 2026-27.
• A car. It carries less than one tonne and fewer than 9 people, driver included. Electric motorbikes and scooters don't count.
• Used by an employee. You or your family use it while you work for the employer.

What counts as the price

Luxury car tax (LCT) is an extra tax on dear cars. It applies above a set price called the LCT threshold. Fuel-efficient cars get a higher threshold of $91,661 for 2026-27.

• Price with GST. The test uses the car's value with GST included.
• Extras count. Parts and accessories sold with the car add to its value.
• Year of sale. The threshold is the one for the year the car was first sold.
• Every sale counts. A used car fails if LCT was due when it was first sold. It also fails if LCT was due on a later sale.

A car just over the limit gets no exemption at all. Ask the dealer for the car's value with GST and extras before you sign.

Plug-in hybrids

Plug-in hybrids lost the exemption on 1 April 2025. A plug-in hybrid first used from that day pays FBT like a petrol car.

A plug-in hybrid used before that day keeps the exemption. It lasts to the end of the fixed lease term signed back then. A change to the deal ends it early:

• An optional extension. Extending the lease past its fixed term.
• New lease terms. A change to the payments or the balloon.
• A break. A gap when the car isn't available to you under the lease.
• A new employer. Moving the lease to another employer.

Charging and running costs

• Power is covered. The electricity to charge an eligible car is part of the exempt perk.
• Running costs too. Rego and insurance for the car are exempt. So are repairs and servicing.
• The wall charger is separate. A home charging station is not a car cost. It may count as a separate perk with its own FBT.
• A set rate per km. Your employer can value home charging with an ATO rate in cents per km.
• No GST back on home power. The calculator pays home charging back to you with no GST credit. Petrol on a fuel card gets its GST back.

The amount on your income statement

An exempt car still shows on your income statement as a reportable fringe benefit. That is the value of a perk your employer must report to the ATO. You pay no tax on it.

The value is worked out as if FBT applied: 20% of the base value a year. It is reported once that value is over $2,000. The amount on your statement is that value times 1.8868.

On the $50,000 car that comes to $18,868 a year. The amount counts toward these tests:

• Medicare levy surcharge. The extra levy for higher earners without private hospital cover.
• HELP and other study loans. It adds to the income your yearly repayment is based on.
• Family payments. Family Tax Benefit and the Child Care Subsidy.
• Child support. It counts in the income used to work out child support.
• Super. The extra super tax for high earners, called Division 293 tax.

A lease with a full post-tax contribution has a reportable amount of $0. So the exempt car can lift the income these tests see.

Changes announced for leases from 1 April 2027

Announced, not yet law. The government announced these changes on 5 May 2026. They apply by the day the lease starts.

• Before 1 April 2027. The full exemption stays for the whole lease.
• $75,000 or less, up to 31 March 2029. Still fully exempt, through a 0% statutory rate.
• Over $75,000 in that time. A 15% statutory rate in place of 20%. That cuts the FBT by 25%.
• From 1 April 2029. Every electric car under the LCT threshold gets the 15% rate.
• Existing leases. They keep the rules they started under.

At 15% you would pay a post-tax contribution of $7,500 a year on a $50,000 car. In the example the total cost of the lease rises to $72,547.

The ATO says only that the car must cost $75,000 or less. The calculator tests the price with GST. The calculator also shows no reportable amount at a 0% rate. Both may change once the law is written.

FBT by car type and start date

The table goes by the day the lease starts. Rows marked announced are not yet law.

Try your own numbers in the calculator