FBT Electric Car Exemption: Eligibility, PHEV Cut-Offs, and What Counts

General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.

The electric car FBT exemption can make a big difference for employers and employees, but it only applies if all eligibility rules are met.

Eligibility checklist

You generally do not pay FBT on the private use of an electric car (and associated car expenses) if all of these are true:

• The car is a zero or low emissions vehicle under the FBT rules.
• The first time the car is both held and used is on or after 1 July 2022.
• The car is used by a current employee or their associate.
• Luxury car tax was never payable on the importation or sale of the car.

These conditions apply whether the benefit is provided directly or via salary packaging.

Plug-in hybrids: the 1 April 2025 change

From 1 April 2025, a plug-in hybrid electric vehicle (PHEV) is no longer treated as a zero or low emissions vehicle for the exemption. However, a PHEV can stay exempt if both of these requirements are met:

• The PHEV was used (or available for use) before 1 April 2025, and that use was exempt.
• There is a financially binding commitment to keep providing the car for private use on and after 1 April 2025.

If a new commitment replaces the old one after 1 April 2025, the exemption stops from the date of that new commitment.

Practical pitfalls to avoid

• Assuming any hybrid qualifies (it doesn’t).
• Missing the “held and used” timing test.
• Failing to check whether LCT was payable on the sale or import.

Key takeaways

• The exemption is all-or-nothing: miss one condition and FBT applies.
• PHEVs lose eligibility from 1 April 2025, except for pre-existing commitments.
• Keep evidence of the “first held and used” date and the financing commitment.

Sources

• Electric cars exemption (ATO)
• FBT on plug-in hybrid electric vehicles (ATO)