Electric vehicles (EVs) are becoming more popular in Australia and they can help your business save money and reduce emissions. If you're an employer, it's important to understand how Fringe Benefits Tax (FBT) applies when you provide EVs or EV charging to employees. Understanding the rules can help you determine whether an FBT exemption may apply and what reporting obligations you may have.
What is Fringe Benefits Tax (FBT)?
FBT is a tax that employers pay when they give extra benefits to employees—things like cars, parking, or memberships—on top of their regular pay. FBT is separate from income tax and is calculated each year from 1 April to 31 March. The current FBT rate is 47%, and this rate applies for FBT years ending 31 March 2023 through 31 March 2027.
Key updates
- On 5 May 2026, the Australian Government announced staged changes to the electric vehicle FBT discount.
- There will be progressive changes from 1 April 2027, with existing leases not impacted by the announced changes.
- More information is available on the Australian Taxation Office (ATO) website.
When EVs are exempt from FBT
Some EVs are exempt from FBT, which means employers don’t have to pay tax on them. To qualify, the vehicle must:
- be a battery electric vehicle (BEV) or hydrogen fuel cell car (see note on plug-in hybrids below)
- carry fewer than 9 people and less than 1 tonne of load
- have been ‘held and used for the first time’ on or after 1 July 2022
- cost less than the Luxury Car Tax (LCT) threshold when first sold.
Note: Conventional (non-plug-in) hybrids, electric motorcycles, e-bikes and scooters, and vehicles carrying one tonne or more or nine or more passengers are not eligible for this exemption.
Important: Effective 1 April 2025, new plug-in hybrids are no longer exempt from FBT. But if the car was already in use before 31 March 2025, the exemption still applies.
Charging EVs and FBT
FBT rules also apply to how and where EVs are charged.
Workplace charging
If employees charge their EVs at work or use public charging stations (including cards or memberships), this is generally considered a car expense and is exempt from FBT.
Public charging
Public charging costs, charging cards, subscriptions or reimbursements may be exempt when they relate to an eligible electric car provided as a car fringe benefit and are properly substantiated as car fuel/electricity expenses.
If you use the Australian Taxation Office (ATO) home charging shortcut method and can't accurately determine what proportion of charging happens at home, public charging costs generally should not be added as a separate claim.
Home charging
Charging at home is a bit more complex. FBT implications and considerations are split between two components – electricity used to charge the EV and installation of home EV chargers.
Electricity used to charge the EV
This is considered a car expense and exempt from FBT. Refer to the ATO’s website for the EV home charging rate for the relevant FBT year.
Installation of home EV chargers
EV chargers may or may not be exempt. The tax usually depends on who pays for the charger. If the:
- employer pays and installs, this generally counts as a taxable benefit to the employee
- employee pays and gets reimbursed, this also counts as a taxable benefit
- charger is bundled into a lease or subscription, the charger and installation component should be separately identified and treated under the relevant FBT rules rather than assumed to be part of the exempt car benefit
The minor benefits exemption may apply where the taxable value is less than $300 and the benefit is provided infrequently and irregularly. This is unlikely for a typical installed home charger and should not be relied on without professional advice.
What employees need to know
Even if EVs and charging are exempt from FBT, they may still be reportable fringe benefits if the value is over $2,000 per year. This amount will show up on your income statement and could affect means-tested support, like:
- Medicare Levy Surcharge
- Tax offsets
- Family assistance or Centrelink payments.
Importantly, associated exempt car expenses, such as registration, insurance, maintenance and electricity/fuel for the exempt car are generally not included when working out this reportable fringe benefits amount.
For example, an $85,000 EV could add $32,000 to your reportable fringe benefits.
Final tips for employers
To help make the most of FBT exemptions:
- Check the Vehicle Emissions Star Rating of vehicles to find battery electric vehicles (BEVs) that meet your needs and discover what you can save. (Note: VESR does not include the vehicle's purchase price, so ensure you also check that the purchase price is under the current Luxury Car Tax (LCT) threshold).
- Keep good records relating to usage and costs to help with compliance.
- Use simple methods like the EV home charging rate to make cost management easier.
- Understand how reportable fringe benefits can impact your staff and communicate this with them.
Following the rules from the Australian Tax Office (ATO) helps you stay compliant and get the most out of your EV investment.
More information
- Talk to a registered tax professional
- Visit
- Australian Tax Office - Electric cars exemption
- Australian Tax Office fact sheet for employers
- Electric vehicles for business for more information about transitioning to electric
Disclaimer: This article is for general information only and is current as of October 2026. Always check with a tax expert to make sure you’re following the latest laws.