Article written by Mark Rogerson
Managing Director
Green Light for EV Tax Changes in 2026–27 Budget
The Federal Budget 2026–27 has announced proposed changes to the Fringe Benefits Tax (FBT) treatment of electric vehicles (EVs), signaling a shift away from the current full exemption model toward a permanent concessional arrangement.
Importantly, these are proposed changes only and are not yet law.
What Is Changing?
Under the current rules, eligible electric vehicles can receive a full exemption from FBT where certain conditions are met.
Under the proposed reforms, the Government intends to transition to a permanent 25% FBT discount from 1 April 2029, replacing the existing full exemption over time.
The concession will apply to electric vehicles valued up to the fuel-efficient luxury car tax threshold and will be implemented through a reduced statutory FBT rate of 15%.
Transitional Arrangements
The Budget papers outline several transitional rules designed to protect existing arrangements and provide time for businesses and employees to adjust.
Existing Arrangements Protected
The Government has stated that:
- Eligible electric vehicles will retain the FBT discount rate that applied when the arrangement commenced. This effectively acts as a grandfathering provision for many existing arrangements.
Vehicles Provided Between 1 April 2027 and 1 April 2029
During the transition period:
- EVs valued at $75,000 or less may continue to access the full exemption.
- EVs above $75,000 (up to the fuel-efficient luxury car tax threshold) will instead receive a 25% FBT discount.
From 1 April 2029
From this date:
- Eligible EVs up to the fuel-efficient luxury car tax threshold will receive the permanent 25% discount model.
- The standard 20% statutory rate will continue to apply to vehicles outside the concession limits.
What Does This Mean for Employers?
These proposed changes may impact:
- Salary packaging arrangements
- Novated lease structures
- Employer-provided vehicle policies
- The after-tax cost of EV ownership for employees
- Decisions around timing of EV acquisitions
Businesses considering electric vehicle acquisitions may wish to review:
- Timing of purchase or lease arrangements
- Vehicle values relative to concession thresholds
- Existing employee packaging agreements
- Long-term fleet replacement strategies
Our Thoughts
While the proposed changes reduce the generosity of the current exemption over time, the Government is still signalling ongoing support for electric vehicle adoption through a concessional FBT regime.
Importantly, the transitional provisions appear designed to avoid sudden disruption for existing arrangements and provide employers with time to plan.
As with all Federal Budget announcements, further detail and draft legislation are still to come. The final law may differ from the initial announcement.
Still got questions?
If you would like assistance reviewing how these proposed changes may impact your business, salary packaging arrangements or vehicle strategy, please contact our office.
Call us on (03) 9802 2533
Email us: info@rogersonkenny.com.au
to talk through your options.
*Disclaimer: This article is general information only and does not take into account your personal circumstances. Always seek professional advice before making financial decisions.*
Mark became a Director at Rogerson Kenny Business Accountants in 2011 and is currently Managing Director. CPA qualified, an SMSF Specialist Advisor™, Mark has a focus on privately held businesses operating in Australia with turnovers above $1m.
