Electric Car Discount (FBT Exemption): Everything You Need to Know

Latest update

The Electric Car Discount Bill was formally introduced to Parliament on 27 July 2022. It has been referred to the Senate Committee, with a report due on 21 September 2022.

The bill will need to go through the remainder of the parliamentary process to become law (below). All signs point to it being approved substantially in its current form.

Below is everything you need to know.

parliamentary process of bill approval

FBT Exemption: Key Features

✅ Eligible cars that are zero or low emissions vehicles are exempt from Fringe Benefits Tax (FBT).

🚗 Zero or low emission vehicles include battery electric vehicles, hydrogen fuel cell electric vehicles; and plug-in hybrid electric vehicles. Petrol-hybrid vehicles (e.g. Toyota Camry Hybrid) without a plug are not eligible. Learn more about the differences here.

📅 Vehicles are to be first held or used after 1 July 2022. If you ordered before this date and receive delivery after, you will be eligible.

2️⃣ A second-hand electric car may qualify for the exemption, provided it was first purchased new on or after 1 July 2022.

◀ Car value (includes delivery fees, accessories and options) must be below the Luxury Car Tax (LCT) threshold for fuel-efficient vehicles: <$84,916 for 2022/23.

📦 Applies to cars under salary packaging arrangements (including those procured under a novated lease).

🔍 To be reviewed in 3 years.

For further details on the bill refer to the explanatory memorandum.

Businesses - How Much Will You Save?

According to advice from the government “a model valued at about $50,000 is provided by an employer through this arrangement, our fringe benefits tax exemption would save the employer up to $9000 a year”.

These estimates are broadly in line with our calculations (outlined below).

For additional information on EV incentives for businesses:

How Much Will You Save Under a Novated Lease?

The government estimates that “for individuals using a salary sacrifice arrangement to pay for the same model, their saving would be up to $4700 a year.” These figures are broadly in line with our calculations (below).

Based on a $50,000 vehicle and $150,000 salary, over 3 years, FBT exempt novated leases will save c. $4,000 p.a.compared to a traditional novated lease. The main driver of this is the much higher "net tax benefit" due to the abscence of FBT payable.

Read our guide on novated leases to learn more about how they work with electric cars.

Note: we are not privy to the assumptions used by the government’s modeling nor do we guarantee the accuracy of zecar’s estimates. These are for illustrative purposes only.

Car Models Eligible for the FBT Exemption

Below we've listed the models that are likely eligible for the FBT exemption, divided across:

  • battery electric vehicles; and
  • plug-in hybrid electric vehicles.

Battery electric vehicles (BEVs) eligible for the FBT exemption

Plug-in hybrid electric vehicles (PHEVs) eligible for the FBT exemption

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