Does Paying a Deposit Before 31 March 2025 Secure the FBT Exemption for PHEVs? Not Quite.
If you’re planning to take advantage of the Fringe Benefits Tax (FBT) exemption for a plug-in hybrid electric vehicle (PHEV) under a novated lease, you need to be aware of a key detail: just placing an order and paying a deposit before the 31 March 2025 deadline won’t be enough to lock in the exemption.
The Australian Taxation Office (ATO) has laid out two crucial conditions that must be met for a PHEV to remain FBT-exempt beyond 1 April 2025:
The car must have been provided for private use before 1 April 2025—meaning it’s not just ordered but actually delivered and available for use by the employee. (ATO Guidance)
There must be a financially binding commitment before 1 April 2025 to keep providing that car as an employee benefit beyond that date. (ATO Guidance)
What this means is that if your PHEV is only delivered after 31 March 2025, it won’t qualify for the FBT exemption, because it was never actually in use under an FBT-free arrangement before the rule change. The Treasury Laws Amendment (Electric Car Discount) Act 2022 reinforces this, stating that the exemption only continues for PHEVs that were already benefiting from the exemption before 1 April 2025. (Legislation)
So What’s the Catch?
A lot of people assume that just signing a contract or paying a deposit secures the exemption—but it doesn’t. If the car is delivered after 31 March 2025, it will be subject to FBT like any other non-exempt vehicle. Experts and lease providers have been warning buyers that delivery is the key date—not the order date. (Industry Warnings)
Bottom Line: Delivery Matters!
If you’re thinking about getting a PHEV under a novated lease, don’t just focus on placing the order before the deadline. Make sure the car is delivered and in use before 31 March 2025—otherwise, you’ll miss out on the exemption, and the car will be subject to FBT from the moment it arrives.
If your car isn’t guaranteed to arrive in time, it might be worth considering a fully electric vehicle instead, since they remain FBT-exempt beyond 2025.