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Tel. 1800 265 546
Fringe Benefits Tax
FACT SHEET
✅ FBT applies to novated leases & is reduced through employee contributions.
✅ Electric vehicles under the luxury tax threshold are fully FBT-exempt.
✅ ECM + EV = maximum tax savings.
✅ Your novated lease provider (that's us!) handles all the FBT compliance for you.
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What is Fringe Benefit Tax?
Fringe Benefits Tax is a tax paid by employers on non-cash benefits provided to employees—like a company car. With a novated lease, FBT is applied to the private use of the vehicle.
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How Does FBT Apply to Novated Leasing?
When you salary package a vehicle through a novated lease, the ATO assumes you’ll use it for both work and personal travel. This private use attracts FBT. However, salary packaging blends pre-tax and post-tax deductions to offset the FBT cost—this is called the Employee Contribution Method (ECM).
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The Employee Contribution Method (ECM)
By making part of your lease payment from your after-tax salary, the FBT liability is reduced or eliminated—without reducing your overall savings.
✅ Result: Most employees pay little or no FBT!
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EVs and FBT Exemption (Big Tax Win!)
From 1 July 2022, eligible battery electric, hydrogen fuel cell, and plug-in hybrid vehicles are FBT-exempt under the Federal Government’s EV policy:
Vehicle must be under the luxury car tax (LCT) threshold
First held and used on or after 1 July 2022
✅ Result: You could save thousands by choosing an eligible electric vehicle!
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