Thinking about switching to an electric car? Timing could make a big difference.
Australia's Electric Car Discount is changing from 1 April 2027, and if you're considering an EV, it's worth understanding what these changes could mean before making your next move.
The good news? There's still time to prepare.
What is the Electric Car Discount?
The Electric Car Discount was introduced to make electric vehicles (EVs) more affordable for Australians by removing Fringe Benefits Tax (FBT) on eligible electric cars provided through arrangements such as novated leases.
Typically, a novated lease allows you to pay for a car and its running costs through your salary. However, FBT can affect the overall cost of these arrangements.
Under the Electric Car Discount, eligible EVs are exempt from FBT, potentially making them more affordable to lease compared to vehicles that do not qualify.
Since its introduction, the discount has helped make the switch to electric driving more accessible. But with changes approaching, understanding the eligibility rules and key dates is becoming increasingly important.
What's Changing to the Electric Car Discount?
The upcoming changes will be introduced in stages, beginning on 1 April 2027. The biggest difference will be how the discount applies to EVs at different price points.
Until 31 March 2027: Current Benefits Remain
For now, the existing Electric Car Discount continues. Eligible electric vehicles priced below the fuel-efficient luxury car tax (LCT) threshold can continue to receive the full FBT exemption through a novated lease.
This means Australians considering a higher-value EV may have an opportunity to access the current benefits before the changes take effect.
1 April 2027 to 31 March 2029: New Price Limits Apply
From 1 April 2027, the announced changes introduce different levels of FBT relief depending on the vehicle price.
- EVs priced at $75,000 or less: Continue receiving the full FBT exemption.
- EVs priced above $75,000: Receive a reduced 25% FBT discount, provided they remain below the applicable luxury car tax threshold.
For example, someone considering a higher-value electric vehicle, such as certain Tesla Model Y variants, may find that the available FBT benefits differ depending on when their lease commences.
From 1 April 2029: Full Exemption Ends
From 1 April 2029, the full FBT exemption is scheduled to end for new arrangements. Instead, eligible electric vehicles below the luxury car tax threshold will receive a 25% FBT discount, regardless of whether they cost more or less than $75,000.
According to the announced transition arrangements, existing eligible leases will not be impacted by these changes.
How Can You Prepare for the Changes?
You don't need to rush into buying an electric car. However, taking a few simple steps now could help you make a more informed decision.
1. Start Researching Electric Vehicles Early
With more electric vehicles entering the Australian market, there's a growing range of models to consider. Before settling on a vehicle, think about what you actually need from your next car.
Consider your daily commute, driving range, charging options, passenger space and overall budget. It's also worth comparing different EV models to see which vehicles may fall within the $75,000 price limit.
You can explore available electric vehicles, compare models and learn more about their features through Remunerator's EV Hub.
2. Understand How Vehicle Pricing Affects Eligibility
Not every electric vehicle qualifies for the same benefits. Under the upcoming changes, the $75,000 price point will become particularly important.
If you're considering an EV above this amount, it's worth understanding how the reduced FBT discount could affect your novated lease compared to the current exemption.
Remember that vehicle eligibility can also depend on the applicable luxury car tax threshold and other requirements. Comparing vehicles across different price points could help you identify options that suit both your driving needs and your budget.
3. Allow Enough Time for Vehicle Delivery
Found your ideal EV? Don't forget to factor in delivery times. Depending on the manufacturer, model and availability, some electric vehicles may take longer to arrive than others.
There are also steps involved in arranging a novated lease, including obtaining a quote, securing approvals and finalising the vehicle purchase. Leaving everything until the last minute could limit your options, particularly if you're considering a higher-value EV ahead of the April 2027 changes.
Starting your research early gives you more time to compare vehicles and understand the process without feeling rushed.
4. Compare the Total Cost of Ownership
The purchase price is only one part of the equation. When comparing electric vehicles, it's worth considering the ongoing costs of ownership, including:
- Charging costs at home and public charging stations
- Insurance and registration
- Servicing and maintenance
- Tyres and other running expenses
- Potential tax benefits available through an eligible novated lease
Electric vehicles generally have fewer moving parts than traditional petrol and diesel vehicles, which can mean lower routine maintenance requirements. However, actual running costs will vary depending on the vehicle, your driving habits and where you charge.
Looking beyond the advertised purchase price can help you build a clearer picture of what owning an EV could cost over time.
5. Explore Your Novated Leasing Options
If your employer offers novated leasing, it may be worth exploring how an electric vehicle could fit into your salary packaging arrangements.
An eligible EV novated lease can allow you to pay for the vehicle and certain running costs using pre-tax salary, subject to the applicable rules. The Electric Car Discount can provide additional benefits by removing FBT from eligible arrangements.
With the changes approaching, understanding how different vehicle prices and lease commencement dates may affect eligibility can help you compare your options.
At Remunerator, we can explain how the novated leasing process works, outline the relevant eligibility requirements and provide an indicative quote based on your circumstances.
What If You Already Have an Electric Vehicle Novated Lease?
If you already have an eligible electric vehicle novated lease, there's some reassuring news. Under the announced changes, existing eligible leases will continue to receive their current benefits.
This means the changes are primarily relevant to people considering entering into a new EV novated lease. However, if you're approaching the end of your lease or considering upgrading your vehicle, it's worth reviewing the rules that may apply to your next arrangement.
Is It Still Worth Considering an Electric Vehicle After April 2027?
Absolutely. The changes do not mean electric vehicles will stop being an attractive option.
While the level of FBT relief is expected to change, EVs may still offer advantages such as lower running costs, reduced tailpipe emissions and access to salary packaging benefits.
The key is understanding which vehicles qualify, how the changes apply and what your overall costs could look like. For many Australians, an electric vehicle may still be a practical and cost-effective choice, even as the discount evolves.
Start Planning, Not Panicking
The Electric Car Discount changes are approaching, but there's no need to make a rushed decision.
If you're considering an electric vehicle, particularly one priced above $75,000, now is a good time to start exploring your options.
Researching vehicles, understanding eligibility requirements and allowing enough time for the novated leasing process could help you avoid unnecessary surprises.
Thinking about making the switch? Explore Remunerator's EV Hub or speak with our team to learn more about eligible electric vehicles and how the upcoming changes may affect your options.
Disclaimer: This article provides general information only and does not constitute financial, taxation or legal advice. Eligibility requirements, legislation and tax treatment may change. individual circumstances, vehicle selection and finance arrangements can affect costs and potential benefits. Consider seeking independent professional advice before making a financial decision.