FBT to apply to PHEVs from 1 April 2025.
The federal government is changing the rules around plug-in hybrid electric vehicles (PHEVs). Currently, PHEVs are considered a zero or low emissions vehicle and exempt from fringe benefits tax (FBT) as part of the electric car exemption.
This is changing. From 1 April 2025, PHEVs will no longer be eligible for the electric car exemption. This means FBT will apply to PHEVs on and from this date.
Frequently asked questions
The good news is existing PHEV novated leases remain eligible for the electric car exemption if it meets both of the following requirements:
1. Use of the PHEV was exempt before 1 April 2025; and
2. There is a financially binding commitment to continue private use of the PHEV prior to and after 1 April 2025 (excluding extensions entered into on or after 1 April 2025).
If the existing PHEV novated lease meets both requirements above, the electric car exemption will continue to apply beyond 1 April 2025 until the current novated lease term expires.
To continue to benefit from the FBT exemption, ensure your existing PHEV novated lease remains consistent with your current agreement and commitments.
Changes to a PHEV novated lease will affect your eligibility for the FBT exemption.
The FBT exemption will cease if one of the below conditions occur:
1. Optional extensions: If the relevant novated lease is extended or refinanced, this will be considered a new commitment. The novated lease will no longer qualify for the FBT exemption where the date of extension is on or after 1 April 2025.
2. Breaks in novation agreements: If there is a break in the relevant novation agreement, where the car is not being used by, or available for private use of, the relevant employee under the agreement, the exemption will no longer apply if this change occurs on or after 1 April 2025.
3. Changes to financial obligations: If the lease payments or the residual value of the PHEV change, the exemption will no longer apply if this change is on or after 1 April 2025. Note: Changes to budgeted running costs (e.g.: fuel) will not impact the exemption.
4. Change in employer: If there is a change in employer (even within the same group of companies), the exemption will no longer apply from the date the employer is changed.
5. Breaks in employee allocation (tool of trade vehicle) for private use: If the relevant PHEV is transferred from one employee to another employee for private use, the exemption will no longer apply if this change occurs on or after 1 April 2025.
PHEVs delivered on or after 1 April 2025 will not be eligible for the electric car exemption even if the order was made prior to 1 April 2025.
If your PHEV delivery is delayed, you will have options to choose from to ensure your vehicle still works for you.
Option 1. Restructure your Novated Lease Package/Quote
If your PHEV does not make the cut-off date for delivery, the novated lease will not be eligible for the electric car exemption and alternatively, will need to be managed using the Employee Contribution Method.
If you choose this method, we will provide you with a quote outlining the package cost and impact on your take-home pay. This quote will need to be signed and returned to SG Fleet prior to delivery of your vehicle.
Option 2. Change your car
If losing the electric car FBT exemption and managing your car through the Employee Contribution Method doesn’t suit your needs, and you do not want to risk having your car delivered after 31 March 2025, you can cancel the current order for your PHEV. We will then work with you to provide quotes and order a new vehicle.
Please note: If you choose this option, you will need to complete all steps and documentation again. The delivery date of the new vehicle will depend on stock availability.
Option 3. Cancel your order
If you’d like to cancel your PHEV order, our team are here to support and work with you when you are ready to look for an alternative car.
Please note: you will be responsible for any cancellation fees or charges dealers may charge.
If you'd like to make changes to your PHEV order, please call 1300 138 235 or email NovatedETArequest@sgfleet.com
To further understand how fringe benefits tax will apply to PHEV’s from 1 April 2025, please visit the ATO website here.