The FBT exemption for electric vehicles is the biggest tax benefit available to Australian car buyers. If your employer offers novated leasing, an EV can save you $5,000-15,000 per year in tax. Here's every car that qualifies and how much you actually save.
How FBT Exemption Works
Normally, if your employer provides a car (or you salary-sacrifice for one), the value is taxed as a Fringe Benefit at 47%. On a $60k car, that's roughly $12,000/year in FBT. The exemption removes this entirely for eligible EVs and PHEVs.
This means your employer deducts the car payments from your pre-tax salary, and you pay no FBT on the benefit. The savings are substantial, especially for higher income earners in the 37% or 45% tax brackets.
FBT Exempt Electric Cars (Under $91,387)
| Car | Price From | Range | Type | Est. Annual Saving* |
|---|---|---|---|---|
| Tesla Model 3 RWD | $54,900 | 510km | BEV | $8,200 |
| Tesla Model 3 LR | $63,900 | 629km | BEV | $9,500 |
| Tesla Model Y RWD | $57,900 | 455km | BEV | $8,600 |
| Tesla Model Y LR | $65,900 | 533km | BEV | $9,800 |
| BYD Atto 3 | $44,381 | 420km | BEV | $6,800 |
| BYD Dolphin | $38,890 | 427km | BEV | $6,000 |
| MG4 Excite 64 | $38,990 | 450km | BEV | $6,000 |
| Hyundai Ioniq 5 | $55,900 | 454km | BEV | $8,400 |
| Hyundai Ioniq 6 | $55,900 | 614km | BEV | $8,400 |
| Kia EV6 | $55,590 | 484km | BEV | $8,300 |
| Kia EV3 | $48,315 | 436km | BEV | $7,300 |
| Volvo EX30 | $49,990 | 476km | BEV | $7,500 |
| Polestar 2 | $59,990 | 533km | BEV | $8,900 |
*Estimated annual tax saving based on $120,000 salary, 37% marginal rate, via novated lease. Actual savings vary by income, state, and lease provider.
Savings Calculator: How Much Do YOU Save?
| Your Salary | Tax Bracket | $45k EV Saving/yr | $65k EV Saving/yr | $85k EV Saving/yr |
|---|---|---|---|---|
| $70,000 | 32.5% | $4,800 | $6,900 | $9,000 |
| $100,000 | 37% | $5,600 | $8,100 | $10,500 |
| $130,000 | 37% | $6,200 | $9,000 | $11,700 |
| $180,000+ | 45% | $7,800 | $11,300 | $14,700 |
On a $180k salary with a $85k EV, the FBT exemption saves $14,700 per year. Over a 5-year lease, that's $73,500 in tax savings. The car effectively costs half of what an equivalent ICE car would cost through salary sacrifice.
Which EVs Are NOT Eligible?
- Standard hybrids (HEV) like the Toyota RAV4 Hybrid, Camry Hybrid. No plug = no FBT exemption.
- Cars over $91,387 like the Tesla Model S, Porsche Taycan (base), BMW iX. These exceed the LCT threshold and are not exempt.
- PHEVs first used after 1 April 2025 may lose eligibility. Check current ATO guidance.
How to Set Up a Novated Lease
- Check with your employer if they offer novated leasing (most employers with 50+ staff do)
- Choose your EV from the eligible list above
- Get quotes from 2-3 novated lease providers (Maxxia, SG Fleet, Salary Packaging Australia)
- Compare the total cost including management fees, interest rate, and residual
- Sign the lease and your employer deducts payments from your pre-tax salary
The lease covers the car payment, insurance, registration, fuel/electricity, servicing, and tyres. Everything comes from pre-tax income.
FBT Exempt vs Buying Outright
| Method | Tesla Model Y ($65,900) |
|---|---|
| Buy outright (after-tax) | $65,900 from post-tax income |
| Novated lease (NO FBT exemption) | ~$55,000 effective cost (some tax benefit) |
| Novated lease WITH FBT exemption | ~$38,000 effective cost |
The FBT exemption effectively gives you a 42% discount on a Tesla Model Y compared to buying it outright from post-tax income. This is why EV novated leases have exploded in Australia.
Not financial advice. Consult your accountant for your specific situation. Tax laws and EV incentives change frequently.
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Disclaimer: All information in this article was believed to be correct at the time of publishing (3 April 2026). Prices are manufacturer recommended retail prices (RRP) and may vary by state, dealer, and options. Specifications, government incentives, and rebates can change without notice. Always verify details with the manufacturer or relevant authority before making a purchase decision. Running cost estimates are based on average Australian driving conditions at 15,000 km/year. All opinions are editorial and independent. CarSorted does not accept payment for recommendations or rankings.
Published by CarSorted Editorial Team · 3 April 2026
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