Why will the PHEV FBT exemption stop from 1 April 2025?

The Australian Taxation Office (ATO) has released advice that from 1 April 2025 plug-in electric hybrids vehicles (PHEVs) will no longer be classified as zero or low emissions vehicles under FBT law. This means that the FBT exemption will not apply to new PHEV leases entered into from 1 April 2025.

PHEVs leased before 1 April 2025 will remain eligible for the FBT exemption if the following two requirements are met:

1. Use of the PHEV was already exempt from FBT before 1 April 2025; and
2. There is a financially binding commitment to continue providing private use of the vehicle to an employee or their associate on or after 1 April 2025.

Please note: From 1 April 2025, a plug-in hybrid electric vehicle will not be considered a zero or low emissions vehicle under FBT law. However, your employer can continue to apply the exemption if both the following requirements are met: 1) Use of the plug-in hybrid electric vehicle was exempt before 1 April 2025. 2) You have a financially binding commitment to continue using the vehicle for private use on and after 1 April 2025. For this purpose, any optional extension of the agreement is not considered binding. To qualify for the EV discount, plug-in hybrid electric vehicles must be delivered by midnight on 31 March 2025. Due to high demand and stock limitations there may be some vehicles that do not meet the delivery deadline for the EV Discount. Customers are advised to confirm delivery timelines before proceeding with their order.