EV FBT Exemption: Who Qualifies and What Is It Worth?
An eligible electric car can be exempt from FBT when it is a zero- or low-emissions vehicle first held and used on or after 1 July 2022, is provided to a current employee, and no luxury car tax has become payable on its supply or importation. Salary-packaged benefits can qualify, but the exemption is not a blanket discount and the car’s value still matters for income tests.
Which cars qualify for the EV FBT exemption?
The ATO describes a zero- or low-emissions vehicle as a battery electric vehicle, hydrogen fuel-cell vehicle or plug-in hybrid electric vehicle, subject to the relevant conditions. The vehicle must be first held and used on or after 1 July 2022, and luxury car tax must never have become payable on the supply or importation.
- Battery electric vehicles
- Hydrogen fuel-cell vehicles
- Plug-in hybrid electric vehicles, where the statutory conditions are met
- No LCT having become payable on the car
- The car being provided for private use by a current employee or their associate
How much can the exemption be worth?
The dollar value depends on the car’s taxable value, your salary and the rest of the quote. The exemption removes FBT on the eligible car benefit and certain associated car expenses; it does not remove the lease’s finance cost, administration fee, residual or every vehicle expense. A calculator should show the net after-tax result, not just label the car ‘FBT exempt’.
What does the EV exemption not cover?
The exemption does not automatically cover a vehicle above the LCT condition, a car that fails the first-held-and-used timing test, or every cost associated with home charging. It also does not mean the benefit disappears from every income test: the ATO says an exempt EV benefit can still affect the reportable fringe benefits amount used for some thresholds.
Worked example: why salary changes the value
Assume two employees package the same eligible $60,000 EV with the same lease costs. The employee on a higher marginal tax rate may receive a larger income-tax benefit from the pre-tax deductions, while the employee with HELP debt or income-tested benefits may see a different practical result. The EV exemption removes FBT; it does not make every quote equally valuable.
Common questions about this decision
Are all electric cars FBT exempt?
No. Eligibility depends on the vehicle type, the first-held-and-used timing requirement and the luxury car tax condition. Check the specific car and quote, rather than relying on the word ‘electric’.
Does salary packaging qualify for the EV exemption?
Yes, an eligible benefit provided under a salary-packaging arrangement can qualify. The lease still needs to be modelled with its actual finance, fees, running costs and residual.
Which primary sources support this guide?
Tax treatment changes. For the underlying rules, check the current Australian Taxation Office material before acting: