Eligible electric cars can receive favourable fringe benefits tax treatment under the current Australian rules. That can materially change the salary-packaging result compared with a non-exempt vehicle.
The current ATO guidance should always be checked before relying on the concession. ATO — Electric cars exemption.
What the exemption changes
The FBT treatment can change how much of the eligible vehicle benefit can be packaged without the ordinary FBT cost. That can have a large effect on an employee's estimated take-home-pay impact.
What it does not change
The finance still has its own:
- amount financed;
- interest rate;
- rental schedule;
- residual;
- finance fees.
A strong tax outcome does not automatically mean the finance component is competitively priced.
Use the Novated Lease Interest Rate Calculator & Quote Decoder to audit the finance layer and then see a separate salary-package estimate using the selected FBT/ECM treatment. The result deliberately keeps finance cost, tax/GST benefit and take-home-pay impact as separate numbers.
Plug-in hybrids from 1 April 2025
The ATO states that from 1 April 2025 a plug-in hybrid electric vehicle generally no longer qualifies as a zero or low emissions vehicle for the electric-car exemption, subject to transitional requirements for qualifying pre-existing commitments.
The calculator now includes a transparent current-rule estimate for eligible EVs, taxable vehicles and qualifying transitional PHEVs. It uses 2026–27 resident income-tax settings and clearly labels the salary-package result as an estimate rather than a provider payroll quote.
Announced changes from April 2027
In May 2026, the Australian Government announced a staged change to the EV FBT discount. The current full discount continues until the end of March 2027. The announcement also states that existing leases will not be impacted by the changes. From 1 April 2027, different treatment is intended to apply depending on vehicle value.
The calculator models the current 2026 treatment for a lease entered now rather than applying a future rule to today's transaction. See the Treasury announcement.
The quote-comparison approach
For an EV quote, compare:
- vehicle purchase price;
- finance principal and rate;
- residual and payment schedule;
- provider administration;
- running-cost assumptions;
- then the current FBT/tax treatment.
This keeps a valuable tax concession from masking an expensive finance or vehicle-price component.
Last reviewed: 17 August 2026.
About the author: KK Neelamraju is a finance and credit professional and an Authorised Credit Representative through GPS Finance Group.
GPS Finance Group (CRN 000575797) is an Authorised Credit Representative of AFAS Group Pty Ltd (ACL 414426). AFCA Member ID 119860. General information only. Credit approval and pricing are subject to lender assessment. Tax-sensitive information should be checked against current ATO guidance and, where appropriate, with a qualified tax adviser.
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