If you’ve been eyeing a plug-in hybrid electric vehicle (PHEV) under a novated lease, here’s your friendly wake-up call: the FBT (Fringe Benefits Tax) exemption for PHEVs is officially hitting the brakes on 31 March 2025. That’s right—after this date, PHEVs will no longer qualify for the juicy tax savings that have made them such an attractive option for salary packaging.
What’s Changing?
Right now, if you get a PHEV through a novated lease, it falls under the EV FBT exemption scheme—which means you don’t have to pay FBT on it. This has made PHEVs super popular with employees looking to cut down on taxable income while driving a fuel-efficient ride.
But the government has decided that PHEVs don’t quite fit into the long-term vision for fully electric vehicles (EVs). So, from 1 April 2025, any new PHEV lease will no longer be eligible for the FBT exemption. Instead, they’ll be treated like regular vehicles for tax purposes, meaning those sweet savings are going to disappear.
What If You Already Have a PHEV on a Lease?
Here’s the good news: if you already have a PHEV under a novated lease before 31 March 2025, you’re safe. The exemption will continue for the remainder of your lease term. So, if you were thinking of jumping on the PHEV bandwagon, now is the time to act!
What Should You Do Now?
If you’re considering a PHEV and want to take advantage of the PHEV FBT exemption before it’s gone, you need to lock in your lease before the deadline. Here’s what you should do:
Talk to Your Employer or Leasing Provider – Get the ball rolling now so there’s no last-minute rush.
Compare PHEVs and Fully Electric Vehicles – Since EVs will still qualify for the FBT exemption, it’s worth weighing your options.
Sign and Settle Before 31 March 2025 – The sooner you finalize your lease, the better.
The Future of Salary Packaged EVs
While PHEVs are being phased out of the FBT exemption, fully electric vehicles (EVs) are still in the clear—for now. So, if you’re keen on maximising your tax benefits while driving a greener car, an EV might be the better long-term play.
Final Thoughts
The end of the FBT exemption for PHEVs might feel like a bummer, but there’s still time to take advantage of it. Whether you lock in a PHEV before the deadline or make the switch to an EV, it’s all about timing and planning ahead. Don’t wait until the last minute—31 March 2025 will be here before you know it!