The federal government offers fringe benefits tax (FBT) exemptions on select electric vehicles (EVs). These exemptions are part of a wider initiative to decarbonise Australia and directly benefit you as a taxpayer. Let’s take a closer look.

What are fringe benefits?

Fringe benefits are added perks from your employer, outside of your regular salary. These benefits might be offered as part of your salary package to either compensate for work-related costs or to make your position more attractive.

Common fringe benefits include:

• Novated car leases
• Discounted loans
• Gym memberships
• Use of company cars for private purposes 
• Free tickets to concerts
• Reimbursements for expenses such as childcare fees

Packaging a car via novated leasing is one of the most common fringe benefits in Australia. 

A novated lease is a way to finance your next car through your employer. It’s a salary packaging benefit that allows you to bundle and pay the key costs of owning and running a car—like servicing, tyres, and fuel—using pre- and post-tax income. That means, when compared to purchasing a car outright, a novated lease could help you save thousands every year. 

This includes GST savings on the car’s purchase price and most running costs, plus the potential savings gained through the reduction to your taxable income.

All the above perks are subject to fringe benefits tax, as regulated by the ATO. 

A few handy things to note:

• FBT applies even if the benefit is provided by a third party
• FBT is separate to income tax and calculated on the taxable value of the fringe benefit
• Employers might claim an income tax deduction for the cost associated with providing fringe benefits and for the FBT amount itself 

You can find more information on FBT via the ATO website.

EVs and FBT exemptions

Select zero-emission EVs are exempt from FBT, giving employees the opportunity to salary package an EV for potential tax benefits. To be eligible, the EV must be first used on or after July 1st, 2022, priced under the luxury car limit of $91,387 (as of July 1st, 2025), and designed to carry a maximum of eight passengers and a load of less than one tonne.

Novated leasing, the Flare way

A Flare novated lease gives you access to the benefits of an FBT exemption, a full-service concierge every step of the way, and the opportunity to design a tailored lease program that fits your lifestyle.

You also get:

• The car you want, with less hassle. No deposit is required for a novated lease, just a refundable order fee, so you can secure the EV you want today. 
• Saving on tax and running costs. Enjoy significant tax savings and less GST on your car purchase, electricity mileage, servicing, and maintenance.
• Easy budget management. Avoid hidden expenses and spread your bills throughout the year by bundling up your finance and running costs into one convenient monthly payment.

If you’re considering an EV or a novated lease, reach out for a personalised quote today.