Can You Get a Novated Lease on a Used EV? The 2026 Rules Explained

Yes, you can get a novated lease on a used EV in Australia, and in 2026 it is arguably the smartest way into one. The FBT exemption that makes new electric cars so cheap through salary packaging also applies to second-hand ones, provided the car ticks three ATO conditions. Combine that with used EV prices that have fallen 25 to 30 per cent from their peaks, and the numbers can beat a new car lease comfortably.

The catch is that the rules around a novated lease used EV are stricter and less understood than for a new car. Whether the exemption applies depends on what happened when the car was sold new, not what you pay for it today. Get that wrong and you sign up expecting a tax-free lease that turns out to be a fully taxed one.

Here is how the eligibility test actually works, what the finance companies will and will not accept, and where the value sits in the current used market.

When a novated lease used EV keeps the FBT exemption

A used electric car keeps the FBT exemption if it meets three conditions set out on the ATO’s electric cars exemption page. First, it must be a battery electric vehicle. Plug-in hybrids lost the exemption from 1 April 2025, except where a binding lease commitment existed before that date. Second, the car must have been both held and used for the first time on or after 1 July 2022. A car first delivered to its original owner in August 2022 can qualify. One that was registered and driven in June 2022 never will, even though the exemption did not exist yet when it was sold.

Third, and this is the one that trips people up, luxury car tax must never have been payable on the car. Not at import, not at its first retail sale, not at any sale since. The test looks backwards through the car’s entire history. What you pay for it as a used car is irrelevant.

That third condition deserves its own section, because it quietly disqualifies a chunk of the used EV market.

The LCT trap: the threshold that matters is from the year the car was sold new

A used EV is only exempt if it came in under the luxury car tax threshold for fuel-efficient vehicles when it was first sold at retail. That threshold moves every year, so the year the car was new determines the bar it had to clear:

Financial year of first sale	Fuel-efficient LCT threshold
2022-23	$84,916
2023-24	$89,332
2024-25	$91,387
2025-26	$91,387
2026-27	$91,661

Source: ATO luxury car tax thresholds

Work through an example. A performance EV that sold new for $99,000 in 2023 attracted LCT, because it sat above that year’s $89,332 threshold. Three years later it might be listed used at $60,000, well under today’s $91,661 figure. It still cannot get the exemption. LCT was payable once, so the car is permanently ineligible, no matter how many times it changes hands or how cheap it gets.

This is why buyers chasing near-new performance models get burned. Plenty have found a lightly used Kia EV6 GT or similar at a tempting price, only to learn the lease cannot be packaged tax-free because the car wore LCT as a new vehicle. The flip side also happens: dealers price demonstrators a few hundred dollars under the threshold precisely so the first retail sale stays clean and the exemption survives. A demo with 2,000 km on the clock that has never had a retail sale is treated like a new car for this test, which makes under-threshold demos one of the better hunting grounds.

Before committing to any used EV, ask the lease provider to confirm eligibility against the car’s history. The good providers check this as a matter of course, and it is exactly the kind of detail worth confirming in writing.

What the finance companies will accept

Most major novated lease providers take used cars, but the financiers behind them set age and value floors. The common rule is that the car must be under 12 years old at the end of the lease. A 7-year-old EV can run a full 5-year term. A 9-year-old one is limited to 3 years. Maxxia and Smartleasing both apply the 12-year rule, while some financiers stretch to 15 years, so it pays to ask if the car is older.

Minimum values of around $5,000 are standard, which rarely troubles an EV. Private sales are usually fine too, though expect the provider to require a formal inspection before settlement. Some providers also offer sale-and-leaseback, where a car you already own is sold to the financier and novated back to you, freeing up the tax treatment on running costs.

One practical note on early EVs: a 2012 Nissan Leaf fails on two fronts, age and the 1 July 2022 rule. For leases committed to before 1 April 2027, the used EVs worth novating are 2022 builds and newer, which conveniently is also where the exemption starts. Treasury’s draft law would lift that date limit for later leases, as covered below.

GST works differently on a used car

The GST saving on the purchase price only exists if there is GST in the sale. Buy a used EV from a dealer and the lease company claims the GST back, so you effectively pay the ex-GST price. That saving is capped at $6,353 for 2026-27. Buy from a private seller and there is no GST in the transaction, so there is nothing to claim.

Running costs are unaffected either way. Charging, tyres, servicing, insurance and registration still flow through pre-tax salary with GST claimed on the lot. For a cheap private-sale car the lost purchase GST saving is smaller in dollar terms, but it is worth modelling both scenarios before deciding where to buy. Our novated lease calculator lets you compare the numbers side by side.

Buying a used EV interstate on a novated lease

Yes, you can novate a used EV bought in another state, and lease providers handle it routinely. The extra work is on your side: getting the car home, registering it in your state, and making sure the saving survives those costs. Buyers often spot a near-new car $5,000 or $6,000 cheaper in Melbourne than the same car new in Sydney. The question is how much of that gap is left at the end.

Start with who’s selling. A licensed dealer is far easier. The lease company pays the dealer directly, the paperwork follows a standard path, and GST is in the price, so the purchase GST saving applies. With a private interstate seller, the provider will usually want an independent inspection and valuation before it settles, and there’s no GST to claim. On a $30,000 car that’s around $2,700 of saving gone, which can wipe out most of an interstate price gap.

Then run the checks any used buyer should:

• PPSR search. A PPSR search costs $2 online as of November 2026 and shows whether the car is under finance, written off or reported stolen. You need the VIN, not the plate.
• Settlement timing. Ask the provider how long settlement takes for an interstate dealer before you book flights. If you plan to fly down and drive home, you want the car settled while you’re there, not a week after you’ve left.
• Battery health. Ask the dealer for a battery state-of-health reading if the car’s software shows one. A near-new EV should read close to 100%.

Getting the car home costs either a transport fee or a road trip. Buyers who’ve had a car shipped between Melbourne and Sydney report paying $1,000 to $2,000. Driving it back costs a day or two and some public charging, and doubles as a long first test of the car.

Registration is the step people underestimate. In NSW, registering an interstate vehicle needs an AUVIS inspection report issued in the last 42 days, CTP insurance and a visit to a service centre. Other states have their own inspection rules. You generally pay stamp duty in the state where the car is registered in your name. Revenue NSW exempts duty you’ve already paid interstate on a car registered to you, but not duty a previous owner paid. Our EV stamp duty and rego guide covers what each state charges.

Add it up before you commit. Take the price gap, subtract transport or trip costs, inspection, transfer fees and any stamp duty difference, and see what’s left. A $6,000 gap on a dealer car you drive home yourself usually still leaves a few thousand dollars. On a private sale that you have shipped, it often doesn’t.

Why the used EV maths looks good in 2026

Used EV prices have done the heavy lifting for you. The AADA and AutoGrab’s 2025 Automotive Insights Report found a one-year-old EV loses around 25 per cent of its value, against 11.5 per cent for petrol cars, and three-year-old EVs retain only about 60.3 per cent. CarsGuide listing data tells the same story: used Tesla Model 3 asking prices fell 30 per cent between January 2023 and December 2024.

Painful for the first owner, useful for you. As of July 2026, typical asking prices look like this:

Used EV (2022-23 build)	Typical price, July 2026	New price today
Tesla Model 3	$42,000–$45,000	from $54,900 before ORC
Tesla Model Y RWD	$38,000–$44,000	from $58,900 before ORC
BYD Atto 3	$32,000–$36,000	$39,990–$44,990

A three-year-old Tesla Model 3 at $43,000 financed through a novated lease carries a smaller amount financed, a smaller residual and lower payments than the same car new, while the pre-tax treatment and exemption work identically. The trade-offs are real but manageable: a shorter remaining battery warranty, and depreciation that, while flatter than year one, has not stopped. If the depreciation side worries you, our guide to EV depreciation in Australia covers which models have held up best.

There is a second-order benefit too. Because the residual is calculated on the amount financed, a cheaper used car shrinks the balloon payment waiting at the end of the lease.

The clock is now running on the full exemption

In May 2026 the government announced the FBT exemption will be wound back in stages, and Treasury released the draft law in September 2026. Under that draft, what counts is the date you make a financially binding commitment to the lease:

• Before 1 April 2027: the current exemption and all three tests above, for the life of the lease.
• 1 April 2027 to 31 March 2029: a 100% FBT discount (the same result as today) for EVs with a base value of $75,000 or less, and a 25% discount from $75,001 up to the LCT threshold.
• From 1 April 2029: a 25% discount at most, whatever the price.

For a used buyer the bigger news is in Treasury’s exposure draft explanatory materials. For leases committed to from 1 April 2027, the 1 July 2022 rule and the “LCT never payable” rule both go. The draft tests only three things: the car is a zero or low emissions vehicle, it is provided to a current employee, and its base value when your employer first holds it is at or under the fuel-efficient LCT threshold for that year. For a used car, that base value is broadly what is paid for it now, not what it sold for new.

That flips the LCT trap above. The $99,000 performance EV now listed at $60,000 would get the 100% discount on a lease committed to between April 2027 and March 2029. So would a used seven-seater that wore LCT when new, or a 2021 EV that missed the 1 July 2022 cut-off, provided the financier’s age limit still allows a sensible term. The opposite timing trap matters too: commit to that same car in March 2027 and the old tests apply, so it pays full FBT for the whole lease.

The draft also tightens what counts as a new commitment. Refinancing, changing the term or residual, adding accessories that lift your payments, or changing employers all start a new commitment under whatever rules apply that day. The measure is now in the Treasury Laws Amendment (Tax Reform No. 4) Bill 2026, introduced to the House of Representatives on 27 October 2026. As of November 2026 it hasn’t passed, so it isn’t law yet. Confirm the final rules with your provider before you sign.

For most used EVs bought before April 2027 the change is less dramatic than it sounds, since a $40,000 second-hand Model 3 that passes today’s tests sits comfortably under the $75,000 tier anyway. But if the car you want lands between $75,000 and $91,661, committing before 1 April 2027 is the difference between no FBT for the whole lease and a 25% discount on full FBT.

For the full mechanics of the exemption, including how employers report it, see our EV FBT exemption guide. If you are still weighing whether to package a car at all, the EV novated leasing hub walks through the whole arrangement, and our guide to how a novated lease compares with a car loan covers the financing alternatives.

The short version: a used EV plus a novated lease is one of the few combinations where the tax system, the depreciation curve and the calendar all currently point the same way. Check the car’s LCT history before you fall in love with it, and get the eligibility confirmed in writing.