If you’re thinking about making the switch to a greener ride, there’s never been a better time to do it. Not only are electric vehicles (EVs) leading the charge for sustainability, but there are also serious tax advantages in Australia for choosing one.
Thanks to recent changes, FBT exemption on electric cars in Australia means you could drive away in a new EV without paying fringe benefits tax — potentially saving thousands. Whether you’re a salary earner or business owner, options like salary packaging electric vehicles or opting for a novated lease for electric vehicles are helping Aussies reduce both emissions and expenses.
Let’s dive into how this all works.
Why Electric Cars Are Getting So Much Attention
Electric vehicles have shifted from niche to mainstream across Australia, and it’s not just because they’re eco-friendly. Rising fuel prices, lower maintenance needs, and expanding infrastructure have made EVs a compelling option. But the biggest drawcard right now? The government’s move to make EVs 100% exempt from fringe benefits tax when purchased under an eligible salary packaging arrangement.
For many drivers, this means owning an EV is no longer just good for the planet — it’s good for your wallet too.
Understanding the FBT Exemption on Electric Vehicles
Fringe Benefits Tax (FBT) is usually charged when an employer provides a car for personal use. But under the FBT exemption on electric cars in Australia, eligible EVs are now excluded from this tax — provided the vehicle is under the luxury car tax threshold and first used after 1 July 2022.
This exemption applies when the car is provided through an employer (via salary packaging or a novated lease), and includes second-hand electric vehicles if they meet eligibility criteria. In simple terms, the ATO won’t sting you with extra tax for driving a clean, green machine — giving you more bang for your buck.
Who Benefits Most From This Change?
The FBT exemption is a game-changer for everyday Australians who want to access EVs without the hefty upfront cost. Those using salary packaging electric vehicles through their employer can spread payments out of their pre-tax income, lowering their taxable income and unlocking huge savings over time.
This also makes electric cars more accessible for families, employees, and even businesses that want to reduce their carbon footprint without sacrificing financial smarts.
Why a Novated Lease Works Well With EVs
A novated lease for electric vehicles offers the flexibility to bundle all vehicle-related expenses (like registration, insurance, maintenance, and even charging costs) into one pre-tax payment. This structure works particularly well for electric cars since the FBT exemption applies, and EVs typically require less servicing than petrol or diesel vehicles.
Plus, with novated leasing, there’s no need to worry about depreciation or trade-ins — the lease takes care of all of that, making it an appealing option for professionals wanting an efficient, predictable payment model.
Extra Perks of Going Electric in Australia
Beyond tax and finance incentives, electric vehicles are winning over drivers for plenty of other reasons:
- Lower running costs (electricity is cheaper than petrol)
- Less maintenance (no oil changes, fewer moving parts)
- Government rebates and incentives in some states
- Access to green vehicle zones or discounted tolls in select areas
- A quiet, smooth driving experience that’s hard to beat
All these perks add up to serious long-term value — not to mention doing your bit to help future-proof our environment.
Save Smart, Drive Smarter
It’s clear that salary packaging electric vehicles or choosing a novated lease for electric vehicles can unlock significant financial advantages — especially with the FBT exemption on electric cars in Australia. Whether you’re an employee looking to reduce your tax bill or a business aiming to green your fleet, EVs offer a flexible, future-forward solution that’s both tax-smart and eco-conscious.
So, if you’re thinking of making your next car electric, now’s the time to drive change — and enjoy the savings while you’re at it.
