Do I have to buy before 31 March 2027, or just start the lease?
The key date is when the car is first held and used under the exemption, so the practical goal is to have your novated lease in place and the vehicle on the road before the rules change. Timing is the tight part: EV order-to-delivery can run to weeks or months, and a lease can only settle once the car is ready to be delivered.
EVs have become far more popular lately with fuel prices where they are, but the timing catches people out. You typically need to order the vehicle two to three months ahead of when you want to drive it away, and shipping or customs delays can stretch that further. The trap we see most often: the client gives the lease company the original handover date, the repayments start coming out of their pay on that date — and the car has not actually arrived yet. Starting early, and giving the lease company a realistic delivery date, is what avoids it.
Importantly, the ATO's guidance indicates that arrangements already running under the full exemption before the changes take effect are generally not disturbed for that lease. In plain terms, if you are correctly in an exempt EV lease before the wind-back, you shouldn't lose the benefit mid-lease simply because the calendar ticks over. That is exactly the kind of detail to confirm in writing with your salary-packaging provider and accountant before you commit — the legislation is what ultimately governs it.
Which electric cars still qualify — and what about plug-in hybrids?
To be eligible for the exemption, the ATO requires a car to be a battery electric vehicle (BEV) or a hydrogen fuel-cell electric vehicle, first held and used on or after 1 July 2022, with a GST-inclusive value at or below the fuel-efficient luxury car tax (LCT) threshold. That threshold is indexed each year and was $91,387 for 2025–26 (ATO) — confirm the current-year figure with us before you set a budget.
Plug-in hybrids are the big catch. PHEVs have not qualified for the electric car FBT exemption since 1 April 2025 (ATO). If you liked the idea of a hybrid for range confidence, know that it no longer gets the concession, so the numbers look very different to a fully electric car.
How much can the exemption actually save me?
The saving comes from two places: you pay the running and lease costs from your pre-tax salary (reducing your taxable income), and because the car is FBT-exempt, you avoid the employee after-tax contribution that petrol and diesel leases usually need to cancel out a 47% FBT bill. For a car around the LCT threshold, that combination commonly runs to thousands of dollars a year versus buying the same vehicle with an ordinary loan — the exact figure depends on your salary, the car and the lease term, so treat any headline number with caution.
One point worth flagging: even with zero FBT, the grossed-up value of the benefit is generally still a reportable fringe benefits amount on your income statement. It doesn't add income tax, but it can affect things assessed on adjusted income — such as family assistance, the Medicare levy surcharge and study loan repayments. It's not a reason to walk away; it's a reason to check the full picture with your accountant first.
Should I rush a decision just to beat the deadline?
No. A deadline is a reason to start looking now, not a reason to sign for a car you would not otherwise buy. The exemption reduces the cost of an EV; it does not make an unnecessary purchase free. Before committing, we'd want you to be comfortable that the vehicle fits your driving needs, that the lease term matches how long you'll keep the car, and that the residual (balloon) value and end-of-lease options are ones you can live with.
If salary packaging genuinely stacks up for your situation, moving before 31 March 2027 can lock in the full exemption on a car above $75,000 that would otherwise only get the 25% discount from April 2027. If your preferred EV is already under $75,000, the urgency is lower — that price band keeps the full exemption for longer.
We had a client who rushed a purchase to beat a tax-incentive deadline and paid full price to get it done. The incentive saved them about $3,000 — but paying full price cost them roughly $5,000 more than a little patience would have, so they finished around $2,000 behind. What I tell the next person in that spot: a tax saving is only worth chasing if you are not giving back more than you save on the price of the car. Run both numbers before the deadline pressure makes the decision for you.
How does financing an EV work if I'm not salary packaging?
Plenty of buyers can't salary package — your employer may not offer it, or you may be self-employed. You can still buy the car sensibly. For personal use, a standard consumer car loan lets you compare rates, terms and whether to carry a balloon payment. If the vehicle is for business use, a chattel mortgage can offer GST and depreciation advantages worth discussing with your accountant. Either way, our asset and vehicle finance team arranges this every week and can line up competitive lenders quickly once you know the car you want.
If you're a business owner or contractor weighing up the structure, it's also worth reading our tips for self-employed borrowers before you apply, and using our repayment calculators to sanity-check the numbers. The right answer is different for a PAYG employee with packaging available versus a sole trader buying a work vehicle.
The honest summary: this is a genuine window worth acting on if an EV is already on your list, but only if the car and the finance suit you. The cleanest way to decide is to map your own numbers with someone who does it daily. Book a 30-minute strategy call and we'll walk through whether a lease or a straight loan makes more sense for you — well before the 31 March 2027 deadline.
Frequently asked questions
If I start a novated lease before 31 March 2027, does the exemption last for the whole lease?
Based on the ATO's May 2026 guidance, the full FBT exemption applies while the current rules are in place until 31 March 2027. Arrangements running under the exemption before the changes take effect are generally not disturbed for the life of that lease, but the treatment of later stages depends on the final legislation, so confirm your specific arrangement with your salary-packaging provider and accountant.
Do plug-in hybrids still get the electric car FBT exemption?
No. Plug-in hybrid electric vehicles (PHEVs) have not qualified for the electric car FBT exemption since 1 April 2025. Only battery electric and hydrogen fuel-cell vehicles first held and used on or after 1 July 2022, priced under the fuel-efficient luxury car tax threshold, are eligible.
Can I still finance an EV if my employer won't do salary packaging?
Yes. If salary packaging isn't available, a standard consumer car loan or, for business use, a chattel mortgage can still be a sensible way to buy an EV. You won't get the FBT saving, but you can still compare rates, terms and balloon options — that's what our asset finance team does every week.
