EV Novated Lease FBT Changes From 1 April 2027

The EV novated lease discount is being wound back from 1 April 2027, and higher-priced EVs are likely to lose most of the current FBT advantage.

For families, the real question is not only:

It is also:

A lease quote may show the salary packaging benefit. It usually will not show whether your CCS falls, your HELP repayment changes, or your household crosses a Medicare Levy Surcharge threshold.

That is where CCSChecker helps.

What is changing from 1 April 2027?

The government has announced staged changes to the EV FBT discount, pending final law and ATO guidance (see the joint ministerial media release).

The simple version:

That means the change is not a small tweak for higher-priced EVs.

If an EV is above $75,000 and still under the applicable LCT threshold, the announced setting is only a 25% discount on payable FBT.

In simple terms:

So a higher-priced EV may become less attractive through a novated lease from April 2027.

But the impact will not be the same for every family.

What does "25% discount on payable FBT" mean?

For affected EVs, the full FBT discount does not continue.

Instead, the car is expected to receive a smaller discount.

A simple way to think about it:

This does not necessarily mean the employee directly pays FBT as a separate bill.

FBT is legally paid by the employer. But in a novated lease, any FBT cost is often built into the lease package, payroll deductions or after-tax contributions.

So if you are looking at an EV above $75,000 from April 2027, your lease provider may need to structure the package differently from today.

Why families need to check more than the lease saving

Most EV novated lease calculators focus on the lease saving.

That is useful, but it is not the whole family picture.

An EV novated lease can also affect:

• Child Care Subsidy
• HELP repayments
• Medicare Levy Surcharge
• Family Tax Benefit
• adjusted taxable income
• reportable fringe benefits

That does not mean an EV lease is bad.

It means the household result may be different from the lease quote.

FBT-discounted does not mean income-test invisible

Under current rules, eligible electric cars can receive the full EV FBT discount.

But there is a catch.

An EV can be FBT-exempt or FBT-discounted and still create a Reportable Fringe Benefits Amount, often called RFBA.

RFBA is not the same as normal taxable salary.

But it can still be used in income tests.

That is why an EV lease can reduce taxable salary and still affect CCS, HELP and Medicare Levy Surcharge.

How an EV novated lease can affect Child Care Subsidy

Child Care Subsidy is based on family income.

An EV novated lease can change the income figure used for CCS because reportable fringe benefits may be included in adjusted taxable income.

That means an EV lease may:

• move your family income estimate higher
• reduce your CCS percentage
• increase your out-of-pocket childcare cost
• create a balancing risk if your income estimate is too low

This is where families can get surprised.

If your family income estimate does not include the EV's RFBA, Services Australia may pay CCS during the year based on an income estimate that is too low. That can lead to a lower final entitlement or a debt at balancing.

For some families, the change will be small.

For others — especially families close to a CCS taper point — it can matter.

How an EV novated lease can affect HELP repayments

HELP repayments are based on repayment income, not just taxable income.

That matters because reportable fringe benefits can be added back.

A simple version:

This is why a payslip can look better while the end-of-year HELP position does not improve as much as expected.

In some cases, RFBA can even push repayment income into a higher repayment band.

CCSChecker estimates this by comparing HELP before and after the EV lease impact.

How an EV novated lease can affect Medicare Levy Surcharge

Medicare Levy Surcharge also uses a broader income test than ordinary taxable income.

Reportable fringe benefits can be included in the income used to test whether you are over the MLS threshold.

This matters most if:

• you do not have eligible private hospital cover
• your family income is close to a threshold
• you already have reportable fringe benefits
• the EV lease creates a large RFBA

Again, this does not mean the lease is bad.

It means the income-test effect should be checked before you sign.

Using a quote with the calculator

Once you have a quote from your salary packaging provider, you can enter the annual pre-tax salary sacrifice deduction directly into the calculator.

Look for the pre-tax component in your quote — it may be labelled "pre-tax deductions", "salary sacrifice" or "pre-tax salary deduction". If the quote shows a weekly or monthly figure, multiply it: weekly × 52, fortnightly × 26, monthly × 12.

Important: Enter your income before the lease in Step 1. The calculator subtracts the deduction for you — do not remove it from your income first.

The calculator will show a "Quote inputs used" box with the net income-test income after the lease applied.

What if your lease uses after-tax contributions?

Many novated lease quotes include an after-tax employee contribution.

Your quote may call this:

• ECM
• post-tax contribution
• employee contribution
• after-tax deduction
• FBT contribution

After-tax contributions can reduce the car fringe benefit taxable value.

That may reduce FBT and may reduce RFBA.

But it also means more of the lease is paid from after-tax income.

So it is not free. It is a trade-off.

The pre-tax deduction and after-tax ECM are different things in a quote and affect different parts of the income-test calculation:

• Pre-tax deduction → reduces taxable income (enter this in the "Pre-tax deduction from quote" field)
• ECM / after-tax contribution → reduces car fringe benefit taxable value and may reduce RFBA (does not reduce taxable income — do not enter in the pre-tax field)

For affected EVs over $75,000 from April 2027, CCSChecker can show both:

• no after-tax contribution entered
• an estimated after-tax contribution scenario

This helps show the difference between the lease or FBT impact and the family income-test impact.

Example: $85,000 EV from April 2027

Say you are looking at an EV worth $85,000, to be purchased or leased after 1 April 2027.

Under the announced settings, that car is above the $75,000 full-discount line.

So CCSChecker would model it as receiving a 25% discount on payable FBT.

That means:

For that kind of car, the current-rule estimate may show full EV FBT discount treatment. The reported 2027 estimate may show partial FBT treatment instead.

If the lease uses after-tax contributions, the FBT and RFBA result may be lower, but take-home pay also falls because more is paid after tax.

The family impact depends on:

• whether the package uses after-tax contributions
• how much RFBA is reported
• your family income
• your childcare fees and hours
• whether you have HELP debt
• whether you have private hospital cover
• how close you are to CCS or MLS thresholds

That is why the same EV can have a different outcome for different families.

Who should pay closest attention?

This change matters most if you:

• are considering an EV over $75,000
• plan to start the lease from April 2027 onward
• receive Child Care Subsidy
• have HELP debt
• do not have private hospital cover and are near an MLS threshold
• already salary package or have other reportable fringe benefits
• work for a hospital, charity or PBI

If none of those apply, the change may still matter, but the family income-test impact may be smaller.

What CCSChecker estimates

The EV calculator estimates how the lease may affect:

• reportable fringe benefits
• adjusted taxable income
• Child Care Subsidy
• HELP repayments
• Medicare Levy Surcharge
• income-test impact for the household
• announced 2027 EV FBT treatment, where selected

It does not replace a novated lease quote.

It does not calculate every lease payment, finance cost, residual value, insurance cost, servicing cost or packaging fee.

It answers one specific question:

For the lease quote side — including repayments, finance costs, running costs, residual value and packaging fees — use your salary packaging provider's quote or a specialist novated lease calculator such as Novated Lease Guide.

What this guide does not model

CCSChecker focuses on the family income-test impact: CCS, HELP, Medicare Levy Surcharge, RFBA and adjusted taxable income.

It does not replace a full novated lease quote or calculator. It does not calculate every lease payment, finance cost, residual value, running cost, insurance cost, servicing cost or packaging fee.

To model the lease itself, use your salary packaging provider's quote or a specialist novated lease calculator such as Novated Lease Guide.

What if you already have an EV lease?

Existing leases are expected to be unaffected by the announced 2027 change.

So if your eligible lease is already in place before 1 April 2027, CCSChecker models it under current treatment.

If you are changing, refinancing, extending or replacing a lease, check the final rules once legislation and ATO guidance are available.

What about plug-in hybrids?

Plug-in hybrids have separate rules.

From 1 April 2025, plug-in hybrid electric vehicles are generally no longer eligible for the electric car FBT exemption for new arrangements, although transitional rules may apply to earlier eligible arrangements.

If you are looking at a plug-in hybrid, do not assume it gets the same treatment as a battery electric vehicle.

Should families avoid EV novated leases now?

Not necessarily.

An EV novated lease may still work well.

But from April 2027, higher-priced EVs are expected to receive a smaller FBT discount.

And even under current rules, RFBA can still affect income tests.

You should model the household impact if you:

• receive Child Care Subsidy
• have a HELP debt
• are close to Medicare Levy Surcharge thresholds
• already have reportable fringe benefits
• are looking at an EV over $75,000
• are planning a lease from April 2027 onward

The key point is simple:

That is what CCSChecker helps you check.

Should I get an EV novated lease before 1 April 2027?

That depends on the car, lease terms and your family income settings.

Existing leases are expected to be unaffected, but CCSChecker does not provide financial advice.

The practical step is to model the household impact and compare it with your lease provider's quote.

A lease quote may tell you the packaging benefit. CCSChecker helps you check the family-income side.

Summary

From 1 April 2027, the EV FBT discount is expected to change.

EVs costing $75,000 or less are expected to keep the full discount during the 2027–29 phase.

EVs above $75,000 but below the applicable threshold are expected to receive a 25% discount on payable FBT.

That means 75% of normal payable FBT remains for affected higher-priced EVs.

For families, the key issue is not just the lease cost.

It is the flow-on effect through RFBA, adjusted taxable income, Child Care Subsidy, HELP repayments and Medicare Levy Surcharge.

Before signing a lease, model both:

• the lease cost through your provider or a specialist lease calculator such as Novated Lease Guide
• the family income-test impact through CCSChecker

Frequently Asked Questions

Does an EV novated lease affect Child Care Subsidy?

It can.

An EV novated lease may create a Reportable Fringe Benefits Amount. Reportable fringe benefits can be included in the income tests used for Child Care Subsidy.

If your adjusted taxable income changes, your CCS percentage may also change.

Are EV novated leases still FBT-exempt?

Under current rules, eligible EVs can receive the full EV FBT discount if they meet the eligibility requirements.

From 1 April 2027, announced changes are expected to keep the full discount only for EVs costing $75,000 or less during the 2027–29 phase.

Higher-priced eligible EVs are expected to receive a 25% discount on payable FBT.

What happens to EVs over $75,000 from 1 April 2027?

Under the announced settings, EVs costing more than $75,000 but below the applicable threshold are expected to receive a 25% discount on payable FBT.

That means 75% of normal payable FBT remains.

Will existing EV novated leases be affected by the 2027 changes?

Existing leases are expected to be unaffected under the announced changes.

If you refinance, extend, vary or replace a lease, check the final rules once legislation and ATO guidance are available.

Does an FBT-exempt EV still create RFBA?

It can.

An EV may be exempt from FBT, but the private-use benefit may still be reportable as RFBA.

That RFBA can affect income tests for CCS, HELP and Medicare Levy Surcharge.

What is ECM in a novated lease?

ECM usually means employee contribution method.

It is an after-tax employee contribution used to reduce the car fringe benefit taxable value.

Your quote may also call it a post-tax contribution, employee contribution, after-tax deduction or FBT contribution.

Should I get an EV novated lease before 1 April 2027?

That depends on the car, lease terms and your family income settings.

Existing leases are expected to be unaffected, but CCSChecker does not provide financial advice.

Model the household impact and compare it with your lease provider's quote.

Does this calculator show total novated lease savings?

No.

The EV calculator focuses on the income-test impact of an EV novated lease, including CCS, HELP and Medicare Levy Surcharge.

It is not a full novated lease quote and does not include every lease payment, running cost, finance cost, residual value or packaging fee.

To model the lease itself, use your provider's quote or a specialist calculator such as Novated Lease Guide.

Where can I model the full novated lease cost?

CCSChecker models the family income-test impact.

For the lease-cost side — repayments, finance costs, residual value, running costs and packaging fees — use your salary packaging provider's quote or a specialist novated lease calculator such as Novated Lease Guide.

Official sources

• Joint ministerial media release — Fairer Tax Treatment to Encourage Affordable EVs
• ATO, FBT exemption for electric cars
• ATO, Reportable fringe benefits
• Services Australia, Child Care Subsidy income test

This information is general in nature and does not constitute financial advice. EV FBT treatment, RFBA reporting, and income-test outcomes can depend on your employer, salary packaging provider, and final ATO guidance. Some 2026–27 thresholds are estimated and will be updated when official values are published. For personalised advice, contact Services Australia or the Australian Taxation Office.