Issued: 10 July 2025
This notice provides important information for employees who have a novated lease over a plug-in hybrid electric vehicle (PHEV) established prior to 1 April 2025.
ATO Position on PHEV FBT Exemption
The ATO has confirmed the following:
PHEVs are only eligible for the FBT exemption if the novated lease was entered into before 1 April 2025.
After 1 April 2025, new leases or material changes to an existing lease arrangement will not be eligible for the exemption.
A material change includes changes to the Novation — for example, due to a new lease, refinance, or change in employer requiring a new agreement.
What This Means for You
If your PHEV lease was established before 1 April 2025 and remains unchanged:
You can continue to access the FBT exemption until the lease ends.
If your lease is replaced, refinanced, restructured, or requires a change in novation after 1 April 2025:
The vehicle will no longer be exempt from FBT, even if it is the same PHEV.
You may continue the novated lease, but it will be treated as a standard statutory novated lease, with deductions split between pre- and post-tax, and without the benefit of the FBT exemption.
For examples on when a PHEV remains exempt from FBT and when the exemption no longer applies after 1 April 2025, please refer to the ATO’s webpage: “FBT on plug-in hybrid electric vehicles”.
If you believe your lease might be affected by a change to a pre-existing commitment after 1 April 2025 please don’t hesitate to contact one of our team on 1300 225 582 or qldgov@allianceleasing.com.au to discuss.
Seeking Advice
The Queensland Government recommends employees seek independent financial and/or income tax advice before entering into or modifying a novated lease arrangement.
