EV Rebates & Incentives

The FBT Exemption Explained

The fringe benefits tax (FBT) exemption is the most valuable EV incentive available to Australian employees. It works through a novated lease: your employer makes lease payments from your pre-tax salary, reducing your taxable income. Normally, a car provided this way would attract FBT — but eligible BEVs are fully exempt.

In practical terms, you pay for the car with pre-tax dollars. The effective saving depends on your marginal tax rate:

• 32.5% bracket ($45,001–$120,000): Pre-tax payments cost roughly 32.5% less than paying post-tax
• 37% bracket ($120,001–$135,000): Effective saving of 37% on each lease payment
• 45% bracket ($135,001+): Effective saving of 45% on each lease payment

To make this concrete: on a $50,000 EV with a three-year novated lease at $1,100/month, a person in the 37% bracket saves approximately $7,300 in tax over the lease term compared to buying post-tax. For someone in the 45% bracket, the saving approaches $11,000.

The FBT exemption also covers running costs included in the novated lease package — registration, insurance, tyres, and charging — if structured as a fully maintained lease. This extends the pre-tax benefit beyond the vehicle cost itself.

To access the exemption, your employer must offer novated leasing. Most medium-to-large employers do through specialist providers such as SG Fleet, Fleetpartners, or Maxxia. If your employer doesn’t currently offer it, they can set it up — there’s no cost to the employer to administer the arrangement.

The exemption covers BEVs and hydrogen fuel cell vehicles priced below the luxury car tax threshold ($91,387 for 2025-26). PHEVs lost eligibility from 1 April 2025.

State Stamp Duty Exemptions and Registration Discounts

State incentives vary considerably. Below is the current position across each jurisdiction:

Stamp duty on a $55,000 vehicle in NSW is typically around $1,800–$2,100 under standard rates. The exemption eliminates that cost entirely for eligible BEVs. In the ACT, the combination of no stamp duty and two years of free registration (approximately $900 saving) adds meaningful value on top of the federal FBT benefit.

These state concessions stack with the FBT exemption. An ACT-based employee purchasing a $55,000 BYD Atto 3 on a novated lease could access: the FBT exemption (saving $5,000–$8,000 depending on income), no stamp duty, and two years of free registration — a combined benefit of $6,000–$9,000 before the fuel saving calculation begins.

Novated Lease vs Buying Outright

The FBT exemption is only accessible via a novated lease (or a company car arrangement). This raises the question of whether the lease structure itself is worthwhile, or whether buying outright and pocketing the depreciation makes more sense.

Novated leasing wins when:

• You’re in the 37% or 45% tax bracket and your employer offers it
• You include running costs in the lease (maximising pre-tax expenditure)
• You don’t plan to own the vehicle long-term and are comfortable with a residual payment or re-leasing at the end of the term

Buying outright makes more sense when:

• You’re self-employed or your employer doesn’t offer novated leasing (you cannot access the FBT exemption independently)
• You’re in the 19% or 32.5% bracket and the tax saving is modest relative to novated lease management fees ($500–$1,200/year with most providers)
• You plan to own the vehicle for 8–10+ years, where the interest cost embedded in leasing outweighs the tax saving

For most salaried employees in the 37–45% bracket whose employer supports it, the novated lease route delivers the largest total saving. For everyone else, buying outright with cash or a standard car loan and claiming the state stamp duty exemption remains straightforward and avoids lease complexity.