ELECTRIC CAR FBT · CHECKED 22 OCTOBER 2026
Check the $75,000 FBT rule.
Status: Treasury exposure draft. Enactment has not been verified.
The current law contains an exemption for qualifying electric car benefits. Treasury proposes changes from 2027 and 2029. The dates and discounts below describe that draft, so confirm the latest legal position before making a commitment.
Start with three things: the car’s FBT base value, the date of the financially binding commitment, and the vehicle and employment conditions. A model name or advertised price cannot settle your tax eligibility.
What applies under current law?
Section 8A of the Fringe Benefits Tax Assessment Act provides an exemption for qualifying battery electric and hydrogen fuel cell car benefits provided in respect of current employment. One condition is that luxury car tax has never become payable on a supply or importation of the car before the benefit is provided. Other application and transitional conditions also matter.
The current exemption does not use Treasury’s proposed $75,000 threshold. We checked the Federal Register’s current compilation, C2026C00332 (1 July 2026), on 22 October 2026. It retains section 8A.
The proposed threshold uses base value.
The draft uses a car’s FBT base value at the earliest holding time, determined under paragraph 9(2)(a). That will often be when the employer first owns or leases the car. The calculation varies for purchased, hire-purchased and leased cars, and includes relevant non-business accessories.
An advertised drive-away price does not establish this value. Ask the employer or salary packaging provider for the calculated base value and what it includes. The draft also requires the base value to be no greater than the applicable fuel-efficient car limit for the financial year of earliest holding.
Read Treasury’s explanation, paragraphs 1.29 to 1.35.
Which commitment date matters?
Under the proposal, the commitment to provide the car determines which arrangements apply. Treasury describes a financially binding transaction that cannot be backed out of. A delivery date or an informal quote alone cannot establish that commitment.
| Commitment made | Proposed treatment |
|---|---|
| Before 1 April 2027 | Existing qualifying section 8A exemption preserved until that commitment ceases. |
| 1 April 2027 to 31 March 2029 | Base value up to and including $75,000: 100% reduction. Other eligible cars: 25% reduction. |
| From 1 April 2029 | New eligible commitments: 25% reduction, including cars with base value below $75,000. |
A qualifying commitment made before 1 April 2029 would retain its 100% reduction after that date until the commitment ceases. Refinancing, changing a lease term or residual, adding accessories that increase payments, changing employer or renewing a lease can create a new commitment.
The draft’s first part would commence on the later of 1 April 2027 and the first quarter day after Royal Assent, with application to benefits provided from 1 April 2027. Its second part would commence on 1 April 2029. These commencement provisions depend on legislation.
What does a 25% reduction mean?
Under the proposed statutory formula, the standard fraction of 0.20 becomes 0.15. Taxable value also depends on the period the car benefit is provided and any employee contribution. This is not a 25% rebate on the purchase price or a calculation of your take-home pay. The draft leaves the operating cost method unchanged, and reportable benefits calculations can still apply.
Before you sign, confirm these five things.
- Current law: ask your registered tax adviser or employer to confirm whether the proposal has been enacted and which final rules apply.
- Base value: obtain the FBT calculation in writing, including relevant accessories and the employer’s earliest holding time.
- Commitment: record the financially binding date, term and what changes could end that commitment.
- Eligibility: confirm vehicle type, employment conditions, car history and the applicable luxury car tax or fuel-efficient car limit tests.
- Your package: confirm fees, finance, residual, insurance and reportable benefits with the employer or provider, then review the result with your adviser.
General information, checked 22 October 2026. Individual tax treatment needs the actual car and arrangement details. Our charging calculator estimates energy costs; it does not include finance or tax savings.
Sources and status limits
- Treasury consultation, closed 28 September 2026. Checked 22 October 2026.
- Exposure draft legislation. Checked 22 October 2026.
- Exposure draft explanatory materials. Checked 22 October 2026.
- FBT Assessment Act 1986, latest compilation C2026C00332. Checked 22 October 2026.
The Treasury draft and explanatory materials were read directly. Parliament’s bills search was unavailable during this check, and the ATO’s proposed-measure page returned an access error. We have not established the absence of a later bill or enactment. Check the latest primary sources with your adviser before relying on the proposed treatment.