novated lease fbt electric vehicle

In Australia, a novated lease on an eligible electric vehicle can be exempt from Fringe Benefits Tax under the Electric Car Discount—yes, that’s the rare tax rule that actually smiles at you.

To qualify, the car must be a zero- or low‑emissions vehicle (battery EV or hydrogen fuel cell), first held and used after 1 July 2022, and originally priced under the fuel‑efficient Luxury Car Tax threshold for the relevant year.

Plug‑in hybrids were included but are being phased out of the exemption from 1 April 2025, with grandfathering for vehicles that already qualified before the change.

In practice, that means your lease payments and eligible running costs can be salary‑sacrificed pre‑tax, FBT payable is generally nil, and the benefit is usually still reported as a reportable fringe benefit.

Exceed the threshold or pick a non‑eligible vehicle and normal FBT rules return, typically managed with post‑tax employee contributions.

Crunch the numbers with your employer or salary‑packager and check current ATO guidance; the savings can be chunky, but the details decide whether it’s a bargain or just a shiny plug and a prayer.