EV EV novated lease: how much can you save?
With a novated lease, your employer pays for the car and its running costs out of your pre-tax salary. Because EVs are exempt from fringe benefits tax, the whole cost comes out before income tax, which can save someone on $100,000 roughly $4,480 a year on $14,000 of lease and running costs. The exemption stays in full for EVs under the luxury car tax threshold until 31 March 2027; after that a phase-down has been proposed. Plug-in hybrids no longer qualify.
How a novated lease works
- You choose the car. A leasing company buys it, and you, your employer and the lessor sign a three-way agreement.
- Your employer deducts the lease payment and a budget for charging, servicing, tyres, rego and insurance from your salary before tax.
- Normally a car benefit attracts fringe benefits tax (FBT), so people pay part from after-tax pay to reduce it. Eligible EVs are exempt, so everything can be paid pre-tax.
- The lessor also claims back GST on the purchase price (up to a limit), which lowers the amount financed.
- At the end there's a balloon or "residual" payment set by the tax office: you pay it, refinance it, or hand the car back.
How much could you save?
An example only: $14,000 a year of lease payments and running costs for a mid-priced EV, paid from pre-tax salary, using 2026–27 tax rates including the 2% Medicare levy. The GST saving on the car comes on top.
| Salary | Paid pre-tax per year | Income tax saved per year | Per week |
|---|---|---|---|
| $55,000 | $14,000 | $3,880 | $74.62 |
| $100,000 | $14,000 | $4,480 | $86.15 |
| $150,000 | $14,000 | $5,460 | $105 |
Real savings depend on the car price, lease term, interest rate, fees and residual. Leasing companies' fees and margins vary a lot, so get two or three quotes and compare the total you'll pay, not just the weekly figure. The EV's value also counts as a "reportable fringe benefit", which can affect things like family payments and HELP repayments.
What's changing (2027 to 2029)
The May 2026 federal budget announced a phase-down of the EV exemption. Draft laws were released in September 2026 but have not yet passed Parliament, so details may change.
- Until 31 March 2027: full exemption for battery EVs priced under the fuel-efficient luxury car tax threshold ($91,387 in 2025–26; $91,661 in 2026–27).
- 1 April 2027 to 31 March 2029: full exemption for EVs up to $75,000; a 25% FBT discount for EVs between $75,000 and the threshold.
- From 1 April 2029: new leases get a 25% FBT discount for eligible EVs.
- Existing leases: keep their treatment until the lease ends, but refinancing, changing the lease or changing employer can count as a new commitment.
- Plug-in hybrids: lost the exemption for new leases from 1 April 2025.
EVs under $75,000
These keep the full exemption under the proposed rules from April 2027. Prices before on-road costs or drive-away, as listed.
BYD Atto 1 ($23,990), Geely EX2 ($26,490), BYD Dolphin ($29,990), Leapmotor B03X ($29,990), BYD Atto 2 ($31,990), MG4 ($31,990), GAC Aion UT ($31,990), GWM Ora 5 ($33,990), Leapmotor B05 ($35,990), GWM Ora ($35,990), Jaecoo J5 EV ($36,990), Chery E5 ($37,990), Leapmotor B10 ($38,990), Forthing Taikon 5 ($39,000), Hyundai Inster ($39,600), Xpeng L03 ($41,900), BYD Atto 3 ($41,990), Geely EX5 ($41,990), MG S5 EV ($41,990), GAC Aion V ($42,590), Hyundai Kona Electric ($45,990), BYD Seal ($46,990), Skoda Elroq ($47,990), Lepas L6 ($47,990), and more on our cheapest EVs to own list.
Before you sign
This is general information, not financial or tax advice. Talk to your employer's salary packaging provider or a licensed adviser about your own situation. The ATO's electric car exemption page has the official rules.
Common questions
Are electric cars exempt from FBT?
Yes. Battery electric cars priced under the fuel-efficient luxury car tax threshold are exempt from fringe benefits tax when provided through an employer, including by novated lease. A phase-down from 1 April 2027 has been proposed but is not yet law.
How much can you save with an EV novated lease?
It depends on your tax rate and the car. As a rough example, someone on $100,000 paying $14,000 a year of lease and running costs pre-tax saves about $4,480 a year in income tax, plus the GST saved on the purchase price.
Do plug-in hybrids still get the FBT exemption?
Not for new arrangements. Plug-in hybrids lost the exemption from 1 April 2025, although leases that were already in place before then can keep it.
When does the EV FBT exemption end?
Under the May 2026 budget proposal, the full exemption continues until 31 March 2027. From April 2027 it's limited to EVs up to $75,000 (with a 25% discount above that), and from April 2029 new leases get a 25% discount instead.
More guides
How we work it out
Weekly cost is the car's claimed energy use (kWh per 100 km) × your distance × your electricity price. "Per week" figures on this site assume 250 km a week with 90% of charging at home. Petrol comparisons use the fuel use and price you choose. Prices are list prices at October 2026 and change often; check with the dealer.
- Electricity: 2026–27 default or regulated flat rates from the AER Default Market Offer (NSW, SE QLD, SA), Victorian Default Offer, Aurora Energy (TAS), Jacana Energy (NT), Synergy (WA) and ActewAGL (ACT).
- Public charging: Sydney survey of Chargefox, Evie, NRMA, Tesla and BP Pulse prices, July 2026.
- Car specs and prices: manufacturer figures as published by CarExpert, AEVA EV fact sheets, Drive and EV Central's car guide. Some prices are the publisher's estimates; check with a dealer.
- Servicing: published capped-price schedules (BYD Sealion 7, BYD Seal, Geely EX5, Jaecoo J5 EV, Kia EV5, Zeekr 7X). Tesla has no fixed service schedule and CarExpert's EV servicing comparison. Where a model's pricing isn't published yet we use the brand's nearest model and mark it as an estimate.
- Tyres: RACV puts EV tyre life at 20,000–40,000 km; replacement set prices from Gridly's 2026 EV tyre cost guide.
- Petrol and diesel: ACCC average retail unleaded and diesel prices in each capital city, 21 October 2026 (ACCC weekly fuel price monitoring).
- Plug-in hybrids: prices, battery sizes and claimed electric range from CarExpert, Cars24, Zecar and The Beep. Real-world electric range is taken as 80% of the claim; plug-ins charged at home each night are assumed to do up to 85% of driving on electricity. Petrol use with a flat battery is our estimate from reviews where makers don't publish one.
- Diesel utes and SUVs: claimed combined fuel use and prices from CarExpert, 4X4 Australia and CarSauce. The HiLux automatic, Prado and Mazda CX-60 D50e are 48-volt mild-hybrid diesels; their small battery assists the engine but can't drive the car on its own.
- Petrol mild hybrids (Suzuki Swift Hybrid, Mazda CX-60 G40e): claimed fuel use and prices from CarExpert.
- Hybrids: claimed fuel use, prices and capped-price servicing as published by CarExpert and CarsGuide. Petrol and hybrid tyres usually last 40,000–60,000 km (RACV); we use 50,000 km.
- Home chargers: typically $1,000–$3,000 installed, about $2,000 typical (What's the Damage, October 2026).
- Novated lease rules: PwC summary of the May 2026 FBT changes.
Printed from EV Pick · evpick.com.au. Prices and costs are estimates; check with the dealer.