Treasury has released draft legislation for several 2026-27 Budget measures. The one most likely to affect you is the change to the fringe benefits tax (FBT) exemption for electric cars. It is still draft law and the detail could change, but the direction is clear. 

What’s changing 

Right now, an eligible electric car provided through your business or a novated lease is fully exempt from FBT if its value is under the luxury car tax threshold for fuel-efficient vehicles. That threshold is $91,661 for 2026-27. 

The draft law phases this out based on when the arrangement is committed to: 

• Before 1 April 2027: the full exemption continues for the life of the arrangement. 

• From 1 April 2027 to 31 March 2029: the full exemption applies only to cars valued at $75,000 or less. Cars above $75,000 and up to the threshold get a 25% discount on FBT instead. 

• From 1 April 2029: new arrangements get a 25% discount only, including cars valued at $75,000 or less. 

• Cars above the threshold get no concession at any stage. 

• Whichever treatment applies when an arrangement starts stays with it for the life of that arrangement. 

What it means in dollars 

Take an $80,000 EV used privately all year under an arrangement committed to from 1 April 2027. Under the current rules there is no FBT. Under the new rules FBT would be about $11,700 a year. The same car in petrol or diesel would attract about $15,600 a year in FBT. 

What does this mean for you? 

If you are thinking about an EV through your business or a novated lease, the price of the car and the timing now matter. Cars above $75,000 lose the full exemption for arrangements committed to from 1 April 2027. Cars at $75,000 or less have until 1 April 2029. Existing arrangements are not affected. If your current lease is coming to an end, check with your accountant before you renew. 

Also in the draft laws: monthly PAYG instalments 

From 1 July 2027 you will be able to choose to report and pay PAYG instalments monthly instead of quarterly, which we covered in August. The draft law also confirms that taxpayers with a history of not meeting their obligations will be required to go monthly. That is one more reason to keep your lodgements and payments up to date. 

Key takeaway 

None of this is law yet, so there is nothing to action today. If you are planning an EV purchase or novated lease in the next 18 months, speak to your accountant before you commit so the timing works in your favour.