Electric vehicles FBT concession scaled back

From 1 April 2027, the tax concession for eligible electric vehicles provided through work arrangements, including novated leases, will start to be reduced for more expensive vehicles. However, if you have an existing arrangement keeps the discount rate that applied when it began.

At the moment, eligible EVs priced at or below the fuel-efficient luxury car tax threshold can access a full FBT exemption.

These changes are centred around three important dates.

• Until 31 March 2027, eligible EVs up to and including the fuel-efficient luxury car tax threshold can continue to access a full FBT exemption.

• From 1 April 2027 to 31 March 2029, the full exemption remains only for eligible EVs costing $75,000 or less. Eligible EVs above $75,000 and up to the fuel-efficient luxury car tax threshold receive a 25% FBT discount instead.

• From 1 April 2029 onwards, eligible EVs up to the fuel-efficient luxury car tax threshold receive a 25% FBT discount.

Things you need to consider

If you’re considering an EV through salary packaging or novated leasing, ask your provider for a cost comparison before and after the change dates. Also check whether the vehicle you’re looking at is eligible. For example, battery electric or hydrogen fuel cell vehicles. Please note plug-in hybrids generally ceased being eligible from 1 April 2025, unless transitional rules apply.

Existing arrangements typically retain the discount rate that applied when they started, but a new arrangement may be subject to the rules in place at that time.

If you are looking to move your lease the Electric Vehicles (EVs) FBT concession generally applies but exactly how it is handled depends on whether you are refinancing the residual value on the current vehicle or switching to a brand-new vehicle.

If you have any questions regarding these changes please contact me paul@congdonfuzi.com.au