The Australian Government has announced staged modifications to the fringe benefits tax (FBT) exemption for electric vehicles (EVs).
Most EVs currently available in Australia will still be eligible for the full Electric Car Discount, with the federal government saying it would make sensible changes to the fringe benefits tax (FBT) exemption for EVs.
“These adjustments will deliver fairer and more financially sustainable tax treatment for EVs,” the government said in a statement.
Related article: EV sales surge as demand grows amidst fuel crisis
“The current New Vehicle Efficiency Standards has seen a dramatic increase in the availability of affordable EV models, and now is the right time to focus the FBT exemption on these cars.
“The new rules will encourage manufacturers to offer more affordable and cheaper to run EVs in the Australian market.”
The changes will be brought in progressively through three phases and are estimated to save $1.7 billion over the five years from 2025-26.
The Electric Vehicle Council (EVC) welcomed the announcement on the Electric Car Discount, describing the outcome as a win for Australian families who will continue to have access to the full discount for the majority of EVs for the next three years.
EVC CEO Julie Delvecchio said the decision gives Australians a clear pathway to ditch petrol costs and the certainty to act now—with no changes taking effect until April 2027.
“This is good news for everyday Australians who are doing the sums on going electric,” Delvecchio said.
“The Albanese Government and Minister Bowen have listened and shown they understand EVs are a cost-of-living measure. This decision means most electric cars in Australia will remain eligible for the Electric Car Discount, allowing people to save thousands on their annual fuel bills.
“This is especially important for outer suburban households—which are strongly represented in EV leasing uptake—where people drive more and spend more on fuel. Keeping EVs accessible means real savings where it matters most.”
Key changes
From April 2027:
- EVs priced up to $75,000 will continue to receive the full FBT exemption
- EVs priced between $75,000 and the fuel-efficient LCT threshold (currently ~$91,000) will receive a 25% FBT discount applied to the full vehicle value.
Related article: New EV sales hit all-time high in Australia
From April 2029:
- All eligible EVs under the LCT threshold will receive a 25% FBT discount, with no current end date
- Existing arrangements will be grandfathered, ensuring current EV drivers and leaseholders are unaffected.
