Fringe Benefits Tax, exemptions for Electric Cars.

If you are thinking about buying a motor vehicle for your company, think about an electric car.  Owning a motor vehicle in your company is ideal for income tax and GST savings, however it is subject to Fringe Benefits Tax (FBT).

There is an exemption to FBT for zero or low emissions vehicles. So what does this mean:

• Battery electric vehicle
• Hydrogen fuel cell electric vehicle 
• Designed to carry fewer than 9 passengers

Please note Plug-Hybrid cars are no longer exempt since 1 April 2025.

There are some cost limits, so a $300,000 Corvette E-ray is not exempt.  When the car was purchased, when new, it must be below the Luxury Car Tax (LCT) threshold.  Fuel-Efficient vehicles have a higher LCT limit than regular vehicles.  The LCT limit for the 2025/26 financial year is $91,387.

To be eligible for an FBT exemption on an electric vehicle for 2025/26 FY your purchase needs to be below $91,387.  This exemption could potentially save you $18,000 in FBT.

Please note these exemptions are not available for sole traders and partnerships.  If you salary package an electric car with your employer, the Fringe Benefit (not the tax) you receive will still be reported on your annual income statement (PAYG payment summary). It’s called a Reportable Fringe Benefit (RFB).