Rule watch · checked 20 October 2026
EV FBT exemption: what happens in 2027?
Short answer: nothing changes before 31 March 2027. From 1 April 2027 the Government plans to keep the full exemption only for EVs costing A$75,000 or less, with a smaller discount for dearer EVs. This is not yet law, and existing leases won't be affected.
General information, not tax advice. Rules change and your circumstances differ. Check the ATO sources linked here and speak to a registered tax agent or your employer's payroll team before you decide.
Key dates
- Now to 31 March 2027: eligible electric cars below the luxury car tax threshold are fully exempt from FBT (ATO).
- 1 April 2027 to 31 March 2029 (proposed): EVs costing A$75,000 or less keep a 100% discount (a 0% statutory rate). EVs above A$75,000 but below the LCT threshold get a 25% discount (a 15% statutory rate) (ATO).
- From 1 April 2029 (proposed): all eligible EVs below the LCT threshold get the 25% discount (ATO).
- Existing leases: the ATO says they won't be affected (ATO).
Is the 2027 change law yet?
No. The ATO's page, last updated 14 May 2026, says the measure "is not yet law" (ATO). It was announced in the 2026–27 Budget on 5 May 2026 (Treasurer's media release). Treasury consulted on draft legislation in September 2026 (Treasury consultation). We'll update this page when a bill passes Parliament.
The three phases
| Period | EV costing A$75,000 or less | EV above A$75,000, below LCT threshold |
|---|---|---|
| Until 31 March 2027 | Fully exempt | Fully exempt |
| 1 April 2027 to 31 March 2029 | 100% discount (0% rate) | 25% discount (15% rate) |
| From 1 April 2029 | 25% discount | 25% discount |
Proposed, per the ATO. The normal car statutory rate is 20% (ATO FBT rates).
Which cars qualify today?
- A zero or low emissions car (battery electric or hydrogen fuel cell), first held and used on or after 1 July 2022, with a value below the luxury car tax threshold for fuel-efficient vehicles when first sold (ATO).
- That threshold is A$91,661 for 2026–27 (ATO).
- Plug-in hybrids generally stopped qualifying from 1 April 2025, apart from pre-existing arrangements (ATO).
What would a 25% discount cost?
As an illustration only: for a car with a base value of A$80,000, a 15% statutory rate gives a taxable value of A$12,000 a year. With the 47% FBT rate and the 2.0802 Type 1 gross-up (ATO FBT rates), FBT would be about A$11,732 if nothing was done to reduce it. Many novated leases offset FBT with after-tax contributions instead. Under today's exemption the figure is A$0. Note that the 47% rate is published only up to the year ending 31 March 2027.
How is the A$75,000 measured?
We don't yet know the final legal test. Under the current ATO definition, a car's base value includes GST, dealer delivery and non-business accessories, and excludes registration and stamp duty (ATO base value). If the final law uses base value, a drive-away price isn't the same figure. Ask your provider to confirm in writing.
What to do now
- If you're shopping above A$75,000, ask when your commitment is treated as made, and what happens if delivery slips past 1 April 2027.
- If you already have a lease, check before refinancing or changing the term after 31 March 2027, in case it counts as a new commitment.
- Run your numbers in our novated lease vs buying calculator.
- Work through the free novated EV lease checklist and see what can go in a novated lease.
For the longer version, including what counts as an existing lease, read What happens to the EV FBT exemption after March 2027?
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Sources
- ATO, Electric car discount: proposed changes (not yet law): https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/electric-car-discount-more-sustainable-fbt-treatment-of-electric-cars
- Treasurer, media release, 5 May 2026: https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/fairer-tax-treatment-encourage-affordable-evs
- Treasury consultation on the exposure draft: https://consult.treasury.gov.au/c2026-800622
- ATO, Electric cars exemption: https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/types-of-fringe-benefits/fbt-on-cars-other-vehicles-parking-and-tolls/electric-cars-exemption
- ATO, Luxury car tax thresholds: https://www.ato.gov.au/tax-rates-and-codes/luxury-car-tax-rate-and-thresholds
- ATO, FBT rates and thresholds: https://www.ato.gov.au/tax-rates-and-codes/fringe-benefits-tax-rates-and-thresholds
- ATO, Taxable value of a car fringe benefit (base value): https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/types-of-fringe-benefits/fbt-on-cars-other-vehicles-parking-and-tolls/cars-and-fbt/taxable-value-of-a-car-fringe-benefit
- ATO, FBT on plug-in hybrids: https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/types-of-fringe-benefits/fbt-on-cars-other-vehicles-parking-and-tolls/fbt-on-plug-in-hybrid-electric-vehicles
Last checked: 20 October 2026.