Buy an electric car now or wait? What the FBT changes mean for your lease
The FBT exemption is the reason a novated lease on an electric car costs so much less than on a petrol car. The May 2026 Budget announced it will narrow from 1 April 2027 and become a partial discount for new arrangements from 1 April 2029. If you’re weighing up an electric car, the timing is part of the decision.
What is changing, and when
Announced in the May 2026 Budget; draft law was released for consultation in September 2026. It is not law yet, and details such as how the lower threshold is measured are set by the legislation. Navo keeps these dates in its rules and updates them when the law passes.
- Now: eligible electric cars under the luxury car tax threshold for fuel-efficient vehicles can be FBT exempt on a novated lease.
- 1 April 2027: the full exemption is for cars under a new, lower price threshold. Cars above it, up to the luxury car tax threshold, get a partial discount on the FBT.
- 1 April 2029: new arrangements get the partial discount, whatever the price.
- Existing leases: not affected.
How it affects your lease
A lease already in place keeps its treatment. For a new lease, the draft law ties the full exemption for cheaper cars to when the commitment to provide the car is made, so signing before a change date matters more than when the car arrives.
What can still change the picture is a job change: a lease moved to a new employer after 1 April 2029 may be treated as a new arrangement, with the partial discount.
Weighing now against waiting
There’s no single answer. These are the things that tip it:
- The car’s price: under the lower threshold, the full exemption lasts for commitments before 1 April 2029; above it, only before 1 April 2027.
- Your job: if a move is likely after 1 April 2029, the weekly cost after the move matters as much as the cost today.
- Prices and models: electric car prices and range keep changing, which can outweigh a tax change either way.
- Your current car: what it costs to keep running while you wait.
- How long you’ll keep the car: a shorter lease limits how much later changes affect you.
Not leasing?
The FBT exemption only matters for cars provided through an employer. On a car loan or a business loan the timing questions are the usual ones: price, rate and when you need the car.
Worked examples
Open an example in the Navo engine, add your own income, and see the figures for every way to pay.
Starting the lease now
Packaging at work, a new electric car, the lease starting in the next few months.
Starting after 1 April 2027
The same car and job, the lease starting after the first change: compare the weekly cost.
Questions
If I sign a lease now, will the 2027 changes affect me?
As announced, existing leases aren’t affected. The changes are not law yet, so check the final law and ATO guidance before you rely on it.
Does the order date or the delivery date count?
Under the draft law, the full exemption for cars under the lower threshold depends on when the commitment to provide the car is made. Check the final law; Navo shows the figures either side of each date.
What happens to my electric car lease if I change jobs after 2029?
A lease moved to a new employer after 1 April 2029 may be treated as a new arrangement and get the partial discount instead of the exemption. Navo shows the weekly cost after a move before you sign.
Should I buy a plug-in hybrid instead?
Plug-in hybrids stopped qualifying for the exemption from 1 April 2025 for new arrangements, so on a novated lease they are usually compared without it.
Reviewed 7 October 2026. General information only, not tax advice. Check current ATO and Treasury guidance; dates and rules may change.