Fringe Benefits Tax
FACT SHEET
What is FBT?
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. ​
Employee Contributions
FBT applies to novated leases & is reduced through employee contributions.
Luxury Tax Threshold
Electric vehicles under the luxury tax threshold are fully FBT-exempt.
Compliance
Your novated lease provider (that's us!) handles all the FBT compliance for you.
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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