Plug-In Hybrid Electric Vehicle (PHEV) incentive ending soon

The FBT exemption for PHEVs will end on 31 March 2025. After this date, PHEVs will no longer qualify for FBT exemptions under novated lease agreements unless the lease is settled before this deadline.

The FBT exemption on eligible fully-electric vehicle novated leases will continue unchanged beyond 1 April 2025.

If your PHEV novated lease is settled and vehicle is delivered on or before 31 March 2025, you can still benefit from the FBT exemption until the end of the lease term. However, leases settled after this date will not qualify for the exemption, which may increase the overall cost of your lease.

For a lease to be considered settled, all documentation and financial approvals must be completed, and the lease must be fully executed by 31 March 2025. Simply having a contract of sale or approval in place is not sufficient. The vehicle also needs to be delivered and in your possession by this date.

If your PHEV novated lease was settled before 31 March 2025, you can retain the FBT exemption until the end of your current lease term.

However, certain changes to your lease after 1 April 2025 – such as refinancing, extending the lease, taking unpaid leave, or changing employers – may result in the lease becoming subject to FBT. This could impact the overall cost of your lease and may require a reassessment of your running costs and benefits moving forward.

Refinancing or extending your lease before 1 April 2025 can allow you to retain the FBT exemption for the remainder of the lease term. It’s essential to review your lease terms and speak to a financial adviser to understand how these changes might affect you.

Taking a break from your lease or transferring your lease due to a change in employment after 1 April 2025 may result in the PHEV becoming subject to FBT. If you anticipate such changes, we recommend seeking advice on how to minimise potential impacts.

If you have questions about your specific situation, contact our customer service team or your leasing specialist. We will help review your lease terms and give general guidance on the best course of action.

If your new lease is settled before 31 March 2025, you’ll continue to benefit from the FBT exemption for PHEVs until the lease term ends. Ensure you allow enough time for approvals and processing to meet this deadline.

It’s important to speak with your financial adviser and our team to fully understand how these changes impact you. We’re here to help you navigate your options and make informed decisions.

As there will be no change to the Novation Agreement, the terms of your lease is not altered and hence, your PHEV will still continue to be FBT exempt

A new Novation Agreement will need to be signed by your new employer, making this an alteration of the terms of your lease. As such, your PHEV may become subject to FBT.

This will require an Asset Substitution form to be completed but does not require a new Novation Agreement, therefore your (new) PHEV will continue to be FBT exempt until the current lease term ends.

The advice provided in this publication and from Novated Lease Australia is based on expert guidance from Gilbert and Tobin, one of the top law firms in the country, as well as from NALSPA, a peak body in the novated and salary packaging space. These organisations are highly respected and provide insights that reflect the most up-to-date legal and industry standards.

That said, we understand that each individual’s situation is unique. Therefore, we always recommend that you consult with your own financial advisor to ensure the advice you receive aligns with your personal financial goals and circumstances. Your advisor can provide tailored guidance specific to your needs and help you navigate any complexities that may arise.