tax
Can my business claim the electric vehicle FBT exemption?
Short answer
Eligible zero or low-emission electric cars priced under the luxury car tax threshold for fuel-efficient vehicles can be exempt from fringe benefits tax when provided to an employee for private use. Plug-in hybrid vehicles lost this exemption from 1 April 2025 unless a financially binding commitment was already in place. The threshold changes each financial year, so check the current figure on ato.gov.au before assuming a vehicle qualifies.
Last reviewed 8 September 2026 by AssetMX.
Direct answer
The FBT exemption for electric vehicles applies to eligible zero or low-emission cars, meaning battery electric and hydrogen fuel cell vehicles, that are priced under the luxury car tax threshold for fuel-efficient vehicles and provided to an employee (including a director treated as an employee) for private use. Plug-in hybrid vehicles no longer qualify unless the business had a financially binding commitment to provide that specific vehicle before 1 April 2025. The price threshold is set by the ATO and changes each financial year, so it should be checked at the time of purchase rather than assumed.
Who this actually affects
Fringe benefits tax is a tax on benefits an employer provides to employees, not a tax on business assets used purely for work. If a vehicle financed through the business is used only for business purposes, there is generally no car fringe benefit to consider in the first place. The exemption matters for businesses that finance or lease an electric vehicle and then make it available to an employee or director for private use, where FBT would otherwise apply.
How this interacts with asset finance
Financing an eligible electric vehicle through a chattel mortgage or lease does not change the FBT treatment. FBT exemption is assessed against the vehicle type, its price against the luxury car tax threshold, and how it is used, not against the finance structure. Interest and depreciation on the business-use share of the vehicle remain generally deductible in the usual way regardless of the FBT outcome.
Novated leasing is a different arrangement
Novated leasing lets an employee finance a vehicle through salary packaging arranged with their employer, and it is assessed separately under its own rules. AssetMX focuses on business asset finance and refers novated lease enquiries to millarX.
Where to next
See the current threshold and eligibility detail on the ATO electric cars exemption page, or explore EV leasing options with AssetMX.
This is general information only and does not take your circumstances into account. It is not financial, tax or legal advice.
Sources
Related questions
Does the FBT exemption apply if I only use the vehicle in the business myself?
FBT applies to benefits provided to employees, including directors treated as employees, for private use. If a vehicle is used solely for business purposes there is generally no car fringe benefit to begin with.
Are plug-in hybrids still exempt?
No. The PHEV exemption ended on 1 April 2025, unless there was already a financially binding commitment to provide that vehicle before that date.
Is novated leasing the same as business asset finance for FBT purposes?
No. Novated leasing is arranged through an employee's salary packaging, not business asset finance. AssetMX refers novated lease enquiries to millarX.
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