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Changes to Electric Vehicle FBT Rules

May 21, 2026

The Federal Treasurer has announced significant changes to the Fringe Benefits Tax (FBT) exemption for electric vehicles (EVs). The current full FBT exemption for eligible EVs will gradually be phased out over the coming years and replaced with a permanent 25% FBT discount.

These proposed changes may impact employers, business owners, and salary packaging arrangements involving electric vehicles.

No Immediate Changes for Eligible EVs Under $75,000

For electric vehicles with a purchase price below $75,000, there will be no changes to the current FBT exemption until 1 April 2029.

This means eligible EVs under this threshold can continue to access the existing full FBT exemption during the transition period.

Proposed EV FBT Changes Timeline

The phase-in of the new rules is expected to occur as follows:

2026–27 FBT Year

  • No changes to the current FBT exemption for eligible electric vehicles.

2027–28 and 2028–29 FBT Years

  • Electric vehicles priced above $75,000 but below the Luxury Car Tax (LCT) threshold (currently $91,387) will no longer receive a full exemption.
  • Instead, these vehicles will receive a 25% reduction in payable FBT.

2029–30 FBT Year Onwards

  • All eligible EVs below the Luxury Car Tax threshold will move to the new system.
  • A permanent 25% discount on payable FBT will apply instead of the current full exemption.

What This Means for Employers and Business Owners

Businesses considering purchasing or salary packaging electric vehicles should review their plans carefully, particularly for higher-value EVs.

The proposed changes may:

  • Increase FBT costs for some employers
  • Affect salary packaging benefits
  • Influence decisions around fleet purchases and EV financing
  • Impact tax planning strategies for directors and employees

Need Advice on EV FBT Changes?

At Gavin Ma & Co, we help businesses and individuals understand changing tax legislation and plan ahead with practical tax strategies.

If you are considering purchasing an electric vehicle through your business or salary packaging arrangement, contact us to discuss how these proposed FBT changes may affect you.