The Federal Government’s EV tax concessions remain one of the biggest incentives available to employees considering an electric vehicle.
But while the benefit has been extended, the rules are changing.
For drivers who are already considering an EV, timing could become one of the most important financial decisions they make over the next few years.
Many employees are already using a novated lease calculator to model different vehicle choices and lease terms before deciding whether to move into an EV now or wait.
The EV Opportunity Is Still Available
Today, eligible electric vehicles can be packaged through an EV novated lease, allowing employees to pay for many vehicle-related costs through salary packaging arrangements.
This can include:
- vehicle repayments
- charging costs
- registration
- insurance
- servicing
For many employees, this has created a significant ownership cost advantage compared with traditional vehicle finance structures.
If you’re new to the concept, our guide on how a novated lease works explains the fundamentals.
The Important Dates: 1st April 2027 and 1st April 2029
While EV incentives remain available, the announced policy changes indicate that the current framework is expected to evolve over time.
From 1 April 2027, the current EV FBT exemption is expected to transition to a two-tier concession model. From 1 April 2029, the framework is expected to transition further to a single concession model, reducing the level of support available for some EV buyers.
As a result, drivers considering an electric vehicle may wish to understand how the timing of their purchase or novated lease could influence their long-term savings.
With these transition dates approaching, many Australians are taking a closer look at the EV FBT exemption and exploring strategies to maximise the benefits available under the current rules.
The 3 + 5 Strategy
One strategy receiving increasing attention is what some providers are calling the “3 + 5” approach.
The concept is relatively straightforward and is designed to maximise access to the current EV FBT exemption framework before the proposed policy changes take effect.
Step 1
Commence a 3-year novated lease for an eligible EV valued at up to $75,000 before the first transition date of 1 April 2027.
Step 2
Before the initial lease concludes and prior to the second transition date of 1 April 2029, commence a new 5-year novated lease for the same vehicle or another eligible EV valued at up to $75,000 while the current exemption framework remains available.
The Potential Outcome
The result is a potential eight-year ownership pathway that maximises access to the full FBT exemption currently available for eligible EVs valued at up to $75,000.
Under the announced framework, from 1 April 2029 eligible EVs above $75,000 but below the Luxury Car Tax (LCT) threshold for fuel-efficient vehicles are expected to receive only a 25% reduction in the standard FBT statutory formula rate. Based on the current 20% statutory rate, this would equate to an effective FBT rate of 15%.
For employees who are already planning to lease or replace a vehicle over the coming years, understanding these transition dates and available strategies may help maximise the benefits available under the current rules.
Why Timing Matters
Vehicle finance decisions are often based on:
- repayments
- vehicle choice
- running costs
But policy timing can also influence long-term affordability.
For EV buyers already planning to:
- replace a vehicle
- move into an electric vehicle
- explore salary packaging
Understanding future policy dates may be just as important as comparing vehicle specifications.
To better understand the current rules, see how EV FBT exemptions change EV costs and how they may affect ownership expenses.
Standard EV Purchase vs Strategic Lease Timing
| Factor | Standard Purchase | EV Lease Timing Strategy |
|---|---|---|
| Upfront Planning | Vehicle purchase only | Vehicle + policy timing |
| Running Costs | Paid separately | Potentially packaged |
| Salary Packaging Benefits | Not applicable | Available through lease structure |
| Future Flexibility | Vehicle dependent | Opportunity to reassess at lease maturity |
| Long-Term Planning | Ownership focused | Structured ownership pathway |
Who Should Consider This Strategy?
This approach may be worth exploring if you:
- are already considering an EV
- are eligible for salary packaging
- expect to remain employed in a salary packaging arrangement
- want to understand long-term ownership costs more clearly
It may be less relevant for buyers planning to keep the same vehicle indefinitely without changing ownership structures.
For many employees, an EV novated lease becomes most attractive when viewed as part of a broader long-term ownership strategy rather than simply a monthly repayment comparison.
How Much Difference Could It Make?
Every situation is different.
Actual outcomes depend on:
- salary
- vehicle choice
- annual kilometres travelled
- lease term
- running costs
However, because eligible EVs can currently access significant tax advantages through salary packaging, some drivers may see substantially different ownership costs compared with traditional petrol vehicles.
Drivers comparing ownership costs often review an EV vs petrol cost breakdown under a novated lease before making a decision.
Many buyers also explore whether an EV novated lease could be cheaper under the current rules and incentives.
The Importance of Modelling Your Own Numbers
No two drivers have the same circumstances.
Factors that influence outcomes include:
- salary
- vehicle choice
- lease term
- annual kilometres
- running costs
That is why calculators and personalised comparisons have become increasingly important before making a decision.
Rather than relying on headline savings figures, drivers should compare their own ownership costs using realistic assumptions.
Many employees now choose to run your numbers before deciding whether a shorter or longer lease strategy suits their circumstances.
Final Thoughts
The extension of the EV discount means the opportunity remains available, but the transition date is now on the horizon.
For employees already considering an EV, understanding how lease timing may affect future benefits could be just as important as choosing the vehicle itself.
The key is not rushing into a decision.
It is understanding your options early enough to make an informed one.
If you’re considering an EV and want to understand the potential impact on your own situation, you can calculate your savings using your salary, vehicle choice and expected driving habits.
Frequently Asked Questions
Can existing EV leases continue after 1st April 2027 and 1st April 2029?
Based on the announced framework, existing EV novated leases that are already receiving the FBT exemption are expected to be grandfathered and continue to receive their existing benefits, provided there are no material changes to the lease arrangement.
The proposed changes are generally intended to apply to new lease commencements from the relevant transition dates, rather than retrospectively removing benefits from existing arrangements.
However, the final treatment of existing leases will depend on the enacted legislation and any grandfathering provisions ultimately included in the law. Employees considering an EV novated lease should seek advice based on their individual circumstances and the prevailing legislation at the time of entering into the lease.
What is the 3 + 5 lease strategy?
The "3 + 5" lease strategy involves commencing a 3-year novated lease for an eligible EV valued at up to $75,000 before 1 April 2027, while the full EV FBT exemption remains available. Before the initial lease term ends and before 1st April 2029, a new 5-year novated lease can then be established for the same vehicle or another eligible EV, subject to the rules and concessions available at that time.
The strategy is designed to maximise access to the current EV FBT exemption framework before the proposed policy transition takes effect. As with any long-term financial arrangement, the suitability and outcomes of this strategy will depend on future legislation, vehicle eligibility requirements, and individual circumstances.
Does everyone qualify for EV salary packaging?
Eligibility depends on employment arrangements, vehicle eligibility and provider requirements.
How can I estimate my own EV savings?
The easiest way is to use a novated lease calculator to compare vehicle costs, lease terms and salary packaging outcomes based on your own circumstances.
Should I choose a lease based only on tax savings?
No. Vehicle choice, affordability, running costs, flexibility and long-term ownership goals should all be considered.
