FBT Exemptions for Plug-In Hybrid Electric Vehicles Are Changing – Here’s What You Need to Know
The Australian Government has announced important changes to Fringe Benefits Tax (FBT) exemptions for plug-in hybrid electric vehicles (PHEVs), which could significantly impact novated leases.
From 1 April 2025, PHEVs will no longer be eligible for the FBT exemption under the Electric Car Discount scheme. However, there are still ways to take advantage of the current benefits if you act before the deadline.
What’s Changing?
Currently, fully electric vehicles (EVs) and some plug-in hybrid electric vehicles (PHEVs) can qualify for an FBT exemption when used under a novated lease, making them more affordable for employees.
From 1 April 2025, however, PHEVs will no longer be considered “zero or low-emission vehicles” under FBT law, meaning they will lose this tax benefit.
Who Can Still Claim the Exemption?
If you already have a financially binding commitment in place before 1 April 2025, you can continue to claim the FBT exemption for the remainder of your lease—but optional lease extensions will not be covered.
For example:
✅ If you enter into a novated lease for a PHEV before 1 April 2025, you will retain the FBT exemption until the lease expires.
❌ If you extend the lease or make any changes to financial obligations after 1 April 2025, the exemption will no longer apply.
Situations That Could End the FBT Exemption
Even if you secure an eligible PHEV before the deadline, certain changes to your lease could result in a loss of the FBT exemption:
🚫 Extending your lease beyond the original term
🚫 Changes in financial commitments, such as lease payment adjustments
🚫 Switching employers and re-novating the lease under a new company
🚫 A break in novation due to unpaid leave or other interruptions
What This Means for You
If you’re considering a PHEV under a novated lease, you may want to act before April 2025 to lock in potential FBT savings.
Already have a PHEV? Make sure your lease agreement remains unchanged to keep your exemption intact.
Want to understand how this affects you?
Get in touch with our team today to explore your options!
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