Radical changes to the FBT exemption for Electric Vehicles (EVs)

On 5 May 2026 the Treasurer announced the current full FBT exemption for EVs will be discontinued with effect from 1 April 2027. This aligns with the recommendations of the Statutory Review of the Electric Car Discount, which found revenue costs of the current FBT exemption are increasing significantly, but that some concessions remain appropriate.

A new regime will provide the following FBT concessions:

• Between 1 April 2027 and 1 April 2029, the full FBT discount will continue to apply only for EVs costing $75,000 or less. In this phase, EVs costing more than $75,000 but below the luxury car tax threshold will receive a 25% discount on FBT.

• From 1 April 2029, only EVs below the luxury car tax threshold will receive the 25% discount on FBT.

The announcement states existing leases won’t be impacted by the changes, suggesting the “pre-existing commitment” transitional measures or a similar approach should apply, to grandfather vehicles held prior to 1 April 2027. It will be necessary to review the specific transitional provisions when legislation is released in due course.

See the Treasurer’s announcement here: Fairer tax treatment to encourage affordable EVs | Treasury Ministers