The Australian Taxation Office (ATO) has introduced a powerful incentive for employers and employees alike: a fringe benefits tax (FBT) exemption for eligible electric vehicles (EVs). This initiative, aimed at accelerating the adoption of low-emission transport, holds particular promise for doctors—especially those employed in public hospitals—who can leverage additional FBT concessions to maximise their financial benefits.

What Is the EV FBT Exemption?

Under the ATO’s guidelines, employers do not need to pay FBT on eligible electric cars and associated car expenses provided to employees for private use. This includes battery electric vehicles and hydrogen fuel cell vehicles.

To qualify, the EV must:

• Be a zero or low emissions vehicle.
• Be first held and used on or after 1 July 2022.
• Not have attracted luxury car tax (LCT). For the 2025 & 2026 years this means the car value needs to be below $91,387.
• Be provided to a current employee or their associate.

Why This Matters for Doctors

Doctors working in public hospitals often benefit from special FBT concessions due to their employment in public benevolent institutions (PBIs). These concessions allow for salary packaging arrangements that are FBT-exempt up to a capped threshold—currently the FBT grossed up threshold is $17,000 per year. The EV FBT exemption is in addition to this cap, meaning doctors can salary package an EV without it affecting their existing FBT-exempt benefits.

This opens up a significant opportunity: doctors or their associates (including family members) can acquire an EV through a novated lease arrangement, have the lease payments deducted from their pre-tax income, and enjoy the vehicle for personal use—all without triggering FBT liabilities or reducing their other salary packaging benefits.

Additional Benefits

The exemption also covers associated car expenses such as registration, insurance, servicing, and charging costs—provided they are part of the same benefit arrangement. However, the provision of a home charging station is not exempt and is treated as a separate fringe benefit.

Importantly, while the car benefit is exempt from FBT, its value still needs to be calculated for reporting purposes. This amount is included in an employee’s reportable fringe benefits total, which may affect eligibility for certain government benefits and obligations, such as family tax benefits or child support assessments.

Implications for Doctors

For doctors, especially those in the public sector, this exemption represents a rare alignment of environmental responsibility and financial advantage. By transitioning to an EV under a compliant salary packaging arrangement, they can:

• Reduce taxable income.
• Avoid FBT on the vehicle.
• Retain full access to other FBT-exempt benefits.
• Support sustainability goals.

Looking Ahead

The government plans to review the EV FBT exemption by mid-2027 to assess its impact on EV uptake. Until then, doctors have a unique window to take advantage of this policy and make a smart, future-focused investment.

Contact Pilot

As always, it’s essential to seek professional advice to ensure you are maximising available benefits. If you would like to discuss how the tax concessions and other incentives apply to you for purchasing an EV, contact Angela Stavropoulos or Kristy Baxter on taxmed@pilotpartners.com.au or (07) 3023 1300.