EV FBT exemption changes from April 2027: should your business order an electric car now?

The EV FBT exemption changes from 1 April 2027 will narrow the tax break, not end it. As announced in May 2026, eligible electric cars costing $75,000 or less stay fully exempt. Pricier EVs that still sit under the LCT threshold for fuel-efficient cars drop to a 25% discount. Two years later, in April 2029, new arrangements get only that discount. Cars already in place are meant to be protected. The catch for anyone ordering now is that the exemption depends on when the car is held and first used, not when you sign the order.

The ATO lists the measure as announced but not yet law. As of late October 2026 we couldn’t find a bill that had passed Parliament. So you’re planning around a proposal. Here’s how to do that sensibly if your company or trust is about to buy or lease an EV.

What exactly is changing, and when?

The measure followed a Treasury review of the scheme and was announced with the 2026–27 Budget. The ABC reported it would save $1.7 billion over four years. Here’s the proposed timeline:

Period	EV costing up to $75k	EV over $75k but under the LCT threshold for fuel-efficient cars	EV over the LCT threshold
Today until the end of March 2027	Fully exempt	Fully exempt	Not eligible — full FBT
April 2027 until the end of March 2029	Fully exempt	25% discount	Not eligible — full FBT
April 2029 onwards	25% discount	25% discount	Not eligible — full FBT

The fuel-efficient LCT threshold is $91,661 for 2026–27 (ATO — LCT thresholds). It’s indexed each July, so check the figure for the year your car is bought. Our luxury car tax page explains how the threshold works.

The 25% discount works through the statutory formula: the taxable value is worked out at 15% of the car’s base value instead of the usual 20%. That still leaves a real FBT bill on private use. The FBT rate itself is 47% for FBT years up to 31 March 2027.

Who does this actually affect?

FBT is an employer’s tax. It applies when a business provides a car that an employee, or their family, can use privately. That includes a company or trust providing a car to its own director. The FBT basics page covers the wider rules.

So the change matters if:

• your company or trust owns or leases an EV that a director or employee takes home;
• you offer novated leases to staff and some of them are choosing EVs; or
• you’re weighing an EV against a petrol or hybrid car mainly because of the exemption.

It doesn’t apply to sole traders or partners driving their own business vehicle. They don’t pay FBT and simply claim the business-use share of costs. If that’s you, the April 2027 date isn’t your deadline.

What counts as an “existing” EV?

This is where most of the confusion sits. The government said existing arrangements won’t be affected. BDO’s summary of the Budget papers says eligible EVs will keep the FBT treatment “in place when the arrangement commenced” (BDO). The draft law hasn’t been released, though, so “commenced” isn’t defined yet.

The best guide we have is how the ATO handled plug-in hybrids when they lost the exemption on 1 April 2025. Under the ATO’s PHEV guidance, a PHEV could stay exempt only if:

1. it was used, or available for use, while exempt before the cut-off; and
2. the business was already locked in, by a commitment that bound it financially, to keep providing the car.

The ATO also said:

• an option to extend a lease, exercised on or after the cut-off, wasn’t treated as binding;
• changing the commitment after the cut-off ended the exemption from that date; and
• it had no discretion to extend the date, even when delivery was delayed.

The electric cars exemption itself already works on these terms. A car qualifies only if it’s first held and used on or after 1 July 2022 (ATO — electric cars exemption). The ATO treats a car as held when it’s owned (including under hire purchase) or leased, and used when it’s used or available for use.

The practical reading: an order form or a deposit on its own probably won’t protect you. Plan for the car to be delivered, financed and available to the driver before 1 April 2027.

How does each finance structure line up with the cut-off?

Your finance structure doesn’t change the tax rules. It does decide when your business holds the car, and that’s the date that counts.

Structure	When the business holds the car	What to line up before 1 April 2027
Chattel mortgage	At settlement, when the business takes ownership	Settlement and delivery in the same week, with the car handed to the driver straight away
Commercial hire purchase	From the start of the agreement (the ATO counts hire purchase as owned)	Agreement start and delivery aligned. Avoid signing weeks before the car arrives.
Finance lease	From the start of the lease	Lease starts on delivery and the car is available to the employee from day one
Novated lease	From when the employer takes on the lease obligations under the novation	Novation signed and car delivered before the cut-off. Payroll deductions set up.

For company-owned cars, it’s tempting to settle early and wait for the car. That doesn’t help if the car isn’t available for use until after 1 April 2027. A settled loan on a car still sitting at the port is the worst of both: you’re repaying it and it may still miss the cut-off.

If you’re working towards a March delivery, it helps to have finance approved and ready before the dealer calls. You can check your options now and we’ll line up settlement for the day the car arrives.

The $75,000 question: how will the car’s cost be measured?

The announcement says EVs “costing” $75,000 or less, but it doesn’t define cost. Is it the list price, the drive-away price or the FBT base value? Several advisers expect something close to the base value, which generally includes GST, dealer delivery and accessories fitted at purchase, but not registration or stamp duty. That’s an expectation, not the law.

What this means in practice:

• Don’t buy a car priced at $74,500 and assume it’s under the cap. Dealer-fitted extras, such as tow bars, tinting and charging cables bought with the car, may count.
• Ask for a quote that splits out the vehicle price, dealer delivery, accessories and government charges, so your accountant can test it once the rules are final.
• Remember the cap doesn’t matter before 1 April 2027. A car held and used before then is fully exempt under the current rules whatever its price, as long as it’s under the LCT threshold.

Illustrative example: one car, two delivery dates

Illustrative only. An electrical contracting company plans to give its operations manager an electric SUV priced around $82,000 drive-away. It sits above the proposed $75,000 cap but below the LCT threshold.

• Scenario A: The company signs in November 2026, the car arrives in February 2027 and settlement on a chattel mortgage happens the same week. The manager takes it home that day. On current information, it’s held and used before the cut-off, so it should keep the full exemption while that arrangement continues.
• Scenario B: The same car is ordered in February 2027 but shipping slips and it’s delivered in May. It’s held and first used after 1 April 2027, so if the law passes as announced, the company is looking at the 25% discount rather than a full exemption.

The car and the price are the same in both scenarios. Only the delivery date changes, and that changes the FBT bill.

Should you rush an EV order before April 2027?

Only if the car makes sense anyway. Use this checklist:

1. Would you buy this car without the tax break? If the business case depends on the exemption alone, think twice. The EV decision guide walks through range, charging and running costs.
2. Get a written delivery date. Ask whether the car is in stock, on the water or still a factory order. Allow a margin for shipping or compliance delays.
3. Check the price against both thresholds. Under $75,000 gives you room either side of the date. Between $75,000 and the LCT threshold makes the date matter much more.
4. Get finance approved early, settle late. Have approval in hand so settlement can happen the day the car is ready.
5. Document first use. Keep the delivery docket and a record of when the car was handed to the employee.
6. Don’t plan on varying it later. Under the PHEV precedent, an extension taken after the cut-off didn’t carry the exemption. Choose the term and balloon you actually want from the start. Our EV finance page covers term and balloon choices.
7. Watch for the legislation. The details, including the $75,000 measure and the transitional rules, could change before the law passes.

Exempt EV benefits are still reportable fringe benefits, so the grossed-up value still goes on the employee’s income statement.

Getting the timing and the finance right

An EV is a good business car when the numbers work, and the next five months are when the dates matter most. The finance shouldn’t be the reason a car misses the cut-off. If you’re lining up an electric car for a director or employee, or helping staff with novated EVs, we can structure the finance around your delivery date.

Enquiring takes about a minute and there’s no credit check when you first enquire, so asking won’t affect your credit score. Your details go to one specialist rather than being sprayed across a pile of lenders, so your phone stays quiet. That specialist is a real person who looks at the car, its price, the delivery date and who’ll be driving, then calls you to talk it through.

One request: fill the form in accurately, especially the vehicle price and your expected delivery month. That’s how we line up the right structure the first time.

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