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Plug-In Hybrid Exemptions (The Updated Rules On Electric Cars)

As of 1 April 2025, the Fringe Benefits Tax (FBT) exemption for plug-in hybrid electric vehicles (PHEVs) has officially ended – unless very specific conditions were met prior to that date.

If your business provides a PHEV to an employee, or if you’re salary packaging one, it’s essential to review your current arrangements to ensure you’re meeting the new FBT obligations.

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Written by

BERIVAN DUBIER
Last Updated Jun 23, 2025
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Under the updated rules, the exemption only continues for PHEVs that:

  • Were used or available for private use before 1 April 2025, and
  • Had a financially binding commitment in place before that date to continue private use.

If those conditions weren’t met, any private use of a PHEV after 1 April 2025 is now subject to FBT. It’s also worth noting that optional lease extensions, employer changes, or new novation agreements generally result in the loss of the exemption moving forward.

If you’re unsure whether your current vehicle arrangements are still compliant or if FBT now applies, it’s a good time to review your position.

We’re helping clients adjust to this change, whether it’s by updating lease terms, calculating new FBT liabilities, or exploring more tax-effective vehicle options. Please contact us if you’re impacted or want to ensure your vehicle benefits are set up correctly.

We’re here to help you navigate these updates and ensure your business stays compliant while still making smart, tax-effective choices. Let’s chat if you need a fresh look at your fleet, salary packaging strategy, or FBT reporting.

Helpful tip:

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If you’re considering purchasing or salary packaging a plug-in hybrid vehicle, review the latest exemption rules before making a commitment. Eligibility can depend on when the arrangement commenced and the vehicle’s specific circumstances. Understanding the updated requirements early can help you avoid unexpected tax consequences.

BERIVAN DUBIER

DIRECTOR

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SEAN DWYER

DIRECTOR
CPA and financial adviser for over 25 years. Loves to help businesses grow. Dad, jogger, cyclist, windsurfer and bad skier.

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