FBT exempt electric cars

A car qualifies when it is a battery electric or hydrogen fuel cell vehicle, it was first held and used on or after 1 July 2022, and its value was below the fuel-efficient luxury car tax threshold at first retail sale and at every sale since. For 2026-27 that threshold is $91,661.

No, and this is the detail worth knowing. The test uses the luxury car tax value: the GST-inclusive price of the car plus any options or accessories supplied with it. Stamp duty, registration and CTP are not counted. Comparing a driveaway price to the threshold overstates the value by thousands and can rule out a car that actually qualifies.

The exemption is lost entirely. There is no partial exemption and no sliding scale. A car one dollar over gets nothing, which is why the options list matters so much: a paint choice or a towbar fitted at the same time counts towards the value.

Not for new arrangements. From 1 April 2025 a plug-in hybrid is no longer treated as a zero or low emissions vehicle for FBT purposes. Arrangements committed to before that date can continue under transitional rules, but they depend on the commitment having been genuinely binding at the time.

It has no end date. The Treasury Laws Amendment (Electric Car Discount) Act 2022 contains no sunset provision for battery electric and hydrogen fuel cell vehicles. The only termination in the Act applies to plug-in hybrids, which lost eligibility for new arrangements from 1 April 2025. What the Act does contain is a statutory review, which is a different thing from an expiry: the exemption continues until Parliament changes the law, and no change has been legislated.

Yes, and the review is written into the Act itself. Schedule 1 item 8 requires the Minister to commission a review of how the exemption has operated, covering the three years from when it commenced, a period that ended 1 January 2026. The review must consider whether the provisions should continue and what types of vehicle should be covered, and it must include public consultation. The report is due to the Minister by 1 July 2027 at the latest, then must be made public within 28 days and tabled in both Houses within 15 sitting days. A review is not a repeal. It is the mechanism Parliament built in to decide what happens next.

Any change would need new legislation, and the way the last change was handled is the best guide to how the next one would be. When plug-in hybrids lost eligibility, arrangements already committed to before the cut-off could continue under transitional rules. That is the usual pattern for this kind of change, because retrospectively taxing arrangements people had already entered into is politically and practically difficult. It is not a guarantee, and the transitional rules turned on the commitment being genuinely binding at the time.

Yes, if it was first held and used on or after 1 July 2022 and was never subject to luxury car tax, including when it was first sold new. A car that attracted luxury car tax when new stays outside the exemption for the rest of its life, no matter what it is worth later.

The ATO publishes a shortcut rate so you do not have to separate car charging from household electricity. For the 2026-27 FBT year it is 5.47 cents per kilometre. You can use actual costs instead if you can substantiate them, and the choice applies per vehicle for the whole year.

Not as a car expense. The ATO is explicit that a home charging station is not a car expense associated with providing a car fringe benefit, so it does not ride on the electric car exemption the way the electricity does. It may instead be a property fringe benefit or an expense payment fringe benefit, which is a different treatment. Some employers and providers will package the hardware under those rules and some will not, so it is a question to ask rather than an assumption to make.

Yes. Electricity used to charge an eligible electric car is an associated car expense and is exempt alongside the car, in the same way fuel would be for a petrol car. Because home charging mixes with the rest of the household bill, the ATO publishes a shortcut rate to work out the cost: 5.47 cents per kilometre for the 2026-27 FBT year. Actual costs can be used instead if you can substantiate them.

Yes. An exempt electric car is still a reportable fringe benefit. The exemption removes the fringe benefits tax your employer would pay; it does not remove the reporting. The amount appears on your income statement each year.

Yes. The exemption is not restricted by the size or type of employer, so a one-person company accesses it on the same terms as a large one. The car still has to meet the test: battery electric or hydrogen fuel cell, with a luxury car tax value at or under $91,661, and never subject to luxury car tax. The reporting obligation remains either way, so the benefit still appears on your income statement.

No, and this is the most expensive thing to get wrong. State duty concessions are generally graded on tailpipe emissions, so an efficient petrol or hybrid car can qualify for them. The federal FBT exemption is not graded: the car has to be battery electric or hydrogen fuel cell, and its luxury car tax value has to be at or under $91,661. A hybrid can therefore win the state concession and get nothing federally. The state break is usually a few hundred dollars, paid once. The exemption is worth thousands, every year of the lease.

No. Luxury car tax value is the GST-inclusive price of the car plus anything supplied with it, such as options, accessories and dealer-fitted extras. Stamp duty, registration and CTP are excluded. That is why the state you live in cannot push a car over or under the $91,661 threshold: on-road costs differ between states, and none of them count. Comparing a driveaway price to the threshold overstates the value and wrongly rules out cars that are eligible.

Not on its own. Victoria legislated a distance-based charge on zero and low emission vehicles, and in Vanderstock v Victoria [2023] HCA 30 the High Court held the charge invalid by a four to three majority. It was a duty of excise, and section 90 of the Constitution gives the Commonwealth exclusive power to impose those. The decision applies to every state and territory, not just Victoria. It does not prevent the Commonwealth legislating a road user charge, which has been under discussion, so this is a question worth revisiting rather than treating as settled forever.

No. The fringe benefits tax rules that make novated leasing work apply to cars, and a motorcycle is not a car for that purpose. The electric car exemption does not reach them either, so an electric motorbike is in the same position as a petrol one. If you want a bike, ordinary finance is the route.