Electric car FBT changes from 1 April 2027, by price band

Three periods, set by the date you commit

• Commitments before 1 April 2027: today’s exemption (section 8A of the FBT Assessment Act). No FBT on the car or its running costs, for the life of that commitment.
• Commitments from 1 April 2027 to 31 March 2029: eligible electric cars would get a 100% discount if their base value is $75,000 or less, and a 25% discount above that, up to the fuel-efficient luxury car tax threshold.
• Commitments from 1 April 2029: a 25% discount for every eligible electric car, whatever its price. Cars above $75,000 committed before then would keep their 25%; cars at or under it would keep their 100% until that commitment ends.

The draft does this by changing the statutory formula rather than the exemption: the usual statutory fraction of 0.2 (20% of the car’s base value each year) is reduced by 100% (to 0) or by 25% (to 0.15). The operating cost method (logbook) is not changed and gets no discount.

What the 25% discount costs on a novated lease

A 25% discount sounds modest, but the gap is between paying nothing after tax and paying 15% of the car’s value each year after tax. With the employee contribution method, that 15% moves out of your pre-tax deduction and into your after-tax pay.

Which cars qualify

Three tests in the draft (section 9A): the car is a battery electric or hydrogen fuel cell vehicle when the benefit is provided; it is provided to a current employee; and its base value when the employer first holds it is not more than the fuel-efficient car limit for that financial year. The explanatory materials give two examples for a car first provided on 1 April 2027, when the limit is $91,661: a base value of $95,000 gets no concession; $90,000 gets the 25% discount.

One difference with today’s law: the current exemption also requires that the car was first held and used on or after 1 July 2022 and that luxury car tax was never payable on any sale. The draft tests only the base value at the time your employer (or the lessor) first holds the car. On the draft’s wording, for a used electric car that could open the discount to cars that fail the current history test.

Plug-in hybrids are not covered at all: they stopped being “zero or low emissions vehicles” on 1 April 2025. See PHEVs and the FBT exemption.

Leases signed before 1 April 2027

The draft keeps the section 8A exemption for a car provided under a commitment made before 1 April 2027 until that commitment ends. The explanatory materials (para 1.11) list what counts as a new commitment, which switches the car to the new treatment from that date:

• refinancing the car;
• changing the terms of the lease, for example the term or the residual value;
• fitting accessories that increase the lease payments (window tinting, entertainment systems, roof racks, bull bars);
• changing employers, even within the same corporate group;
• moving to another government department while the car stays with the old one.

Taking a new lease on the same car when the old one expires is also a new commitment: the explanatory materials’ own example has a car at 100% until the lease ends in October 2030, then 25% under the renewed lease.

Reportable fringe benefits do not change

As today, the discounted car still appears on your income statement as if the fraction were 0.2 (draft subsection 135P(3)). With the 25% discount and an after-tax contribution of 15% of the base value, the reportable amount is the remaining 5% of the base value × 1.8868.