Paywise CEO Frank Agostino has moved to reassure Australians that the Federal Government’s changes to the Fringe Benefits Tax (FBT) exemption for electric vehicles (EVs) will not impact existing EV novated lease customers and will be introduced gradually over several years, from April 2027.
“Many Australians are hearing headlines about changes to EV tax incentives and wondering whether the benefit is disappearing altogether,” Agostino said.
“The simple answer is no – and importantly, nothing changes until April 2027.”
Under the current rules, eligible EVs financed through a novated lease remain fully FBT exempt, meaning you can still access significant tax savings without needing to use your post-tax salary.
“Right now, eligible EV novated leases remain fully tax free,” Agostino said.
“There is currently no FBT to pay and no requirement for post-tax contributions, which is why novated leasing continues to be one of the most cost-effective ways to get into an electric vehicle.”
From April 2027, the EV FBT exemption will begin to be phased down as part of the Government’s proposed changes.
Key Phased Changes:
- EVs under $75,000 would remain fully exempt from FBT
- EVs priced between $75,000 and the Luxury Car Tax threshold ($91,661 for 2026/27) would move to a reduced-benefit model with a 25% FBT discount
- From April 2029, all eligible EVs under the Luxury Car Tax threshold would transition to the reduced 25% FBT discount model.
Agostino said one of the most important details for current EV drivers is that existing novated lease arrangements will not be affected.
“The Government has confirmed that existing EV novated leases will be grandfathered,” he said.
“If you already have an EV novated lease in place with your current employer, these changes will not impact your existing arrangement.”
“For most people with an existing eligible EV novated lease, the announcement indicates their current arrangement should continue as is. That said, changes such as moving employers, refinancing, extending the lease or entering a new arrangement may affect how the rules apply, so please seek advice before making any change.”
Agostino said the changes represent a gradual reduction in benefits for future arrangements, rather than the removal of EV incentives altogether.
“The policy is not being abolished. The incentive is simply being scaled back progressively over time for new leases moving forward,” he said.
He also encouraged Australians to compare the total weekly cost of owning and operating a vehicle, particularly as fuel prices and broader living costs remain high.
“Today, many Australians can still access a mid-range EV for around $150 per week through a novated lease, including finance, electricity, insurance, registration, servicing and tyres,” Agostino said.
“When you compare that against what many households are currently spending on petrol and vehicle running costs every week, the savings can be substantial.”
He encouraged Australians to explore their own potential savings using Paywise’s online Novated Leasing calculator.
“The easiest thing people can do is compare their current costs against what an EV novated lease could look like for them,” he said.
“Most people are genuinely surprised by how much they could save.”