Things might change.
But nothing is confirmed yet.
If you've been thinking about getting into an electric vehicle through a novated lease, you've probably seen headlines about the EV FBT exemption being "reviewed" in 2026.
So what does that actually mean for you, especially if you already have a lease or are about to enter one?
Let's break it down.
First, a quick refresher. What is the EV FBT Exemption?
Right now, eligible electric vehicles can be leased through your employer without triggering Fringe Benefits Tax (FBT).
That's a big deal.
It means:
- You can pay for your car using pre-tax salary
- You avoid FBT on the benefit
- Overall costs can be significantly lower compared to a petrol or diesel car
For many Australians, this has made EVs far more accessible.
Why is the government reviewing it?
The exemption was introduced to accelerate EV adoption in Australia.
And it's worked.
More people are driving EVs than ever before. Employers are offering it. Awareness is growing.
Now, the government is reviewing:
- The cost of the incentive
- Its effectiveness
- Whether it should continue in its current form
What could change?
At this stage, nothing has been confirmed.
But reviews like this usually look at:
- Eligibility criteria for vehicles
- Price thresholds
- How long the exemption remains
- Whether it's adjusted, extended, or phased out
No official changes have been announced.
What happens if you already have a novated lease?
This is where most people understandably get nervous.
The key thing to know is that government policy changes are usually not applied retrospectively.
In simple terms:
- Existing arrangements are often "grandfathered"
- This means your current lease conditions typically continue as agreed
- Your tax treatment is based on the rules in place when you entered the lease
While we can't guarantee how future policy will be structured, historically, major changes come with transition rules that protect people already in the system.
So if you're already in a novated lease for an EV, it's unlikely you would suddenly lose the benefit overnight without warning or a transition period.
What if you enter a novated lease before any changes?
Timing matters here.
If you start a novated lease under the current rules:
- You are entering under today's legislation
- The financial structure is based on those current settings
- Any future changes would typically apply to new arrangements, not existing ones
This is why incentives often create a window of opportunity.
Once rules change, new leases may be assessed differently, But those already in place are usually treated separately.
Why this matters for your decision
Uncertainty can cause people to pause.
That makes sense.
But there are a few practical ways to think about it.
1. The current benefit is still available
Nothing has changed yet.
The EV FBT exemption is still in place today.
2. Acting now locks in current conditions
If you move forward now, your lease is based on today's rules, not future ones.
3. Waiting comes with trade-offs
You might get clarity later.
But you may also miss out on the current incentive if changes are introduced.
Don't forget the bigger picture
Even outside of tax benefits, EVs offer:
- Lower running costs
- Less maintenance
- The ability to charge at home
So while the tax exemption is a major advantage, it's not the only one.
What happens next?
If any changes do occur, they would likely include:
- Advance notice
- Clear start dates
- Transition arrangements
That gives people time to plan.
Again, no confirmed changes have been announced yet.
The key takeaway
The review doesn't mean the opportunity is gone.
It just means it's being looked at.
And right now, the benefits are still very real. Especially for those already in a lease or considering getting started under the current rules.