What the exemption removes
Without the exemption, a novated lease usually uses the Employee Contribution Method, where you make a post-tax contribution to cancel the FBT. On an eligible EV that contribution is not required, so more of the cost stays pre-tax.
What qualifies
- Battery electric vehicles (and hydrogen fuel cell vehicles)
- A drive-away price under the fuel-efficient LCT threshold, $91,661 for 2026-27
- First held and used on or after 1 July 2022
Plug-in hybrids are no longer eligible for new arrangements after 1 April 2025.
It is still reportable
The exemption removes the FBT payable, but the benefit is still a reportable fringe benefit that can appear on your income statement. It does not change your income tax, but it can affect some income-tested measures. Your CarBon consultant can walk you through what it means for you.
Common questions
What is the EV FBT threshold?
The drive-away price must be under $91,661, the fuel-efficient luxury car tax threshold for the 2026-27 financial year. It is indexed annually.
Do plug-in hybrids still qualify?
No. The plug-in hybrid exemption ended for new arrangements on 1 April 2025.