Explained
How the electric car FBT exemption works
The FBT exemption is the single biggest saving in novated leasing, and it is why an eligible EV is such a strong deal. Here is how it works, in plain terms, including the part most ads leave out.
What FBT normally does
A novated lease is a fringe benefit, and fringe benefits usually attract fringe benefits tax (FBT). On a petrol car that FBT has to be covered, which eats into the saving. On an eligible electric car, there is no FBT to pay.
The exemption, in plain terms
Because an eligible EV is exempt from FBT, the whole lease, the car and its running costs, can come out of your pre-tax salary with nothing to offset. That is what makes the take-home saving so much larger than on a comparable petrol car.
Which cars qualify
To be exempt the car must be:
- Battery-electric or hydrogen fuel-cell (plug-in hybrids stopped qualifying for new arrangements from 1 April 2025)
- First held and used on or after 1 July 2022
- At or under the luxury car tax threshold for fuel-efficient vehicles, $91,661 for 2026-27, on its drive-away price
Most EVs Australians actually buy sit under that threshold. See the EV novated lease page for the models.