The EV Tax Break Is Being Wound Back: What It Means If You Are Buying on a Novated Lease
Most of the EVs that come through our workshop now arrive on a novated lease. The owner has done the sums, signed the paperwork, and a few weeks later they are standing at the bench asking me what protection costs and reaching for their card. Almost every time my first question is the same one. "Have you asked your lease company yet?" Most have not, because nobody told them they could.
This year there is a second thing nobody has told them either, and it has a date on it.
What is actually changing, and what is not
Let me be careful here, because there is a lot of loose talk going around and I would rather give you the real version.
Novated leasing is not being scrapped. It is not going anywhere. What is changing is the fringe benefits tax exemption on electric cars, the thing that made an EV on a novated lease so much cheaper than the same car bought any other way. In May the government announced it is winding that exemption back in stages, following Treasury's review of the electric car discount.
The short version. The full FBT exemption continues as it is now until 31 March 2027. From 1 April 2027, the full exemption only applies to EVs valued at $75,000 or less. EVs above that, up to the luxury car tax threshold, drop back to a 25 per cent discount on the FBT instead of paying none. Then from 1 April 2029 the full exemption is gone entirely, and everything eligible sits on that 25 per cent discount.
So it is not a switch being flicked off. It is a staircase down. But the top step, the one where an eligible EV attracts no FBT at all, has an expiry date on it now, and that date is 31 March 2027.
Why the deadline matters more than it looks
Here is the part that changes how you should think about timing. Existing arrangements are grandfathered. The government has been explicit that the changes do not affect leases already in place. The FBT treatment you have on the day you sign carries through for the term of that lease.
Read that again, because it is the whole point. This is not a case of the benefit disappearing out from under you mid lease. It is a case of the door being open until 31 March 2027, and whatever you walk through it with, you keep.
If you are already thinking about an EV on a novated lease, that turns a vague "sometime this year" into an actual decision with a deadline attached. And if you are buying something above the $75,000 mark, the difference between signing before and after that date is not small change.
I am a film installer, not your accountant, and I am not going to pretend otherwise. Get the numbers from your lease provider. But do get them, and do not leave it until March 2027 to start asking.
While you are at it, package the protection in
This is the bit almost nobody at the dealership mentions. Your novated lease is not just the car, it is a budget. Registration, insurance, servicing, tyres, charging, and in most cases the protection work you have had done to the vehicle.
If your lease provider approves it, we can put the whole package through as one quoted job rather than a card payment on the day. Paint protection film, whether that is a front end or the full car. Window tinting in Suntek Ceramic CIR. Ceramic coating in whichever tier suits your paint. And the one people forget, a 12 month maintenance wash program, so the car is actually looked after for the life of the lease rather than run through a servo wash on a Sunday.
The process is simple and we do it most weeks. You tell us the car and what you are after. We write an official itemised quote addressed to your leasing company rather than to you. You forward it to your lease provider or salary packaging consultant. If they approve it, they add it to the lease and settle with us directly. You pay nothing upfront, and the cost sits inside a budget that is coming out of your pre tax income rather than what is left after the tax office has had its turn.
If your provider wants the quote in a particular format or split into separate lines, tell us and we will rework it. It costs me ten minutes and it can save you a lot.
The $75,000 line, and why your protection package touches it
Now the honest warning, and this one matters more from 2027 than it ever did before.
Accessories and treatments fitted to a car before delivery count towards its value when the tax office works out which side of a threshold it falls on. Today that threshold is the fuel efficient luxury car tax figure, a little over $91,000 and indexed every July. From April 2027 there is a second, much lower line at $75,000, and that is the one most EVs will be sitting near.
So if your car is close to a threshold, a large protection package fitted at delivery can in principle nudge it over, and losing an exemption over a set of films would be a miserable way to save nothing. If your car is comfortably under, this is a non issue and you can stop worrying about it. If it is close, ask your lease provider or your accountant to confirm the treatment before you commit. I would rather flag it and have you check than stay quiet and have you find out in April.
Protecting a car you hand back is not wasted money
Owners on a lease sometimes talk themselves out of protection because the car is not theirs at the end. I understand the logic, but it has it backwards.
At the end of a novated lease you either hand the car back or you pay the residual and keep it. If you hand it back, the paint is assessed, and stone chips down the bonnet and swirls through the clear coat are exactly what gets written up. If you buy it out, you have just bought a car carrying three years of freeway damage in the front end, and you are the one paying to fix it. Either way the paint underneath is your problem.
Film is the only thing in this trade that comes off cleanly at the end. Three years of gravel and grit land on the urethane, and when it is removed the paint beneath looks the way it did the day the car was delivered. That is the whole point of it.
Get the quote before the car lands
The best time to talk to us is before you take delivery, not after. A car that has never been driven has never been chipped, and film on untouched paint is the cleanest job we ever do.
We are in Nunawading, easy from anywhere across the eastern suburbs. Send us the vehicle details and who your lease provider is, and we will have a formal quote written and in your inbox to forward on. No deposit, no pressure, and if your provider knocks it back you have lost nothing but an email.
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