Australia skips cash rebates and instead waives Fringe Benefits Tax on salary-packaged EVs, letting workers lease or buy cars with pre-tax income. The policy saves drivers the upfront GST on vehicles (up to $6,334) and provides as much as A$50,000 in tax savings over five years, boosting uptake without new government spending.
Photos Courtesy of: WhipSmart
SYDNEY, Nov. 07, 2025 (GLOBE NEWSWIRE) -- While the UK has made headlines in the last few months with its bold new £650 million electric car grant scheme - offering up to £3,500 off EVs under £37,000 - Australia has taken a very different path.
Rather than relying on taxpayer-funded subsidies, Australia's electric vehicle (EV) adoption is accelerating through Fringe Benefits Tax (FBT) exemptions, with WhipSmart at the forefront of helping drivers and businesses unlock unprecedented savings.
Most upfront government subsidies in Australia have been wound up and instead Australia's electric vehicle (EV) policy leans heavily on novated leasesalary packaging, driven by Fringe Benefits Tax (FBT) exemptions. While it may not sound as flashy as a cash rebate, it's a move that could make more long-term economic sense - for both consumers and the government.
The UK's model hands over public money to reduce sticker prices. In contrast, Australia's approach works by removing a tax liability - specifically, the FBT on eligible EVs. This allows employees to use pre-tax income to lease or purchase electric vehicles through their employer, cutting costs significantly.
According to Federal Treasurer Jim Chalmers, Australians are saving around $4,700 per year on a $50,000 EV under this scheme.
WhipSmart Novated Leasing CEO, Tim Brown, says this model not only eases cost pressures for households but also creates a smarter fiscal outcome for the nation.
"It's a win-win scenario - Australians save thousands a year while the government avoids costly subsidy programs. It makes electrification more cost-effective for everyone involved," he said.
WhipSmart, a leading Australian novated lease and EV finance specialist, has seen firsthand how the FBT exemption is reshaping the market.
"Over a five-year lease, many of our customers are saving up to $50,000 in tax by salary packaging an electric vehicle," says Tim Brown, CEO of WhipSmart. "That's not a discount off the sticker price - that's real, hard-earned money kept in your pocket through reduced income tax and no GST on the upfront purchase of the car or ongoing running costs."
WhipSmart reports that, in many cases, packaged EVs are now cheaper over the life of a lease than comparable petrol cars - even before factoring in running costs.
These tax savings are now one of the most effective financial levers available for middle-income Australians to drive an EV - often putting them ahead of even heavily discounted petrol equivalents when you factor in fuel/electricity, servicing, and depreciation.
Price remains the biggest hurdle to EV adoption. Even when total cost of ownership is lower, the upfront cost still scares many buyers off.
"Consumer confidence in EVs is improving, due in part to the ever increasing number of cars visible on the road," says Tim Brown. "But while these cars are already more affordable than petrol models, when you look at the full picture, the benefits of novated leasing needs further promotion to help continue to increase sales of EVs over petrol or diesel vehicles."
Salary packaging takes the sting out of the upfront cost, spreading payments over time and allowing buyers to access tax savings immediately. That reduces 'sticker shock' and makes EVs more accessible to everyday Australians.
"At the same time, brand loyalty to petrol and diesel vehicles remains strong and so does misinformation," says the WhipSmart CEO. "Many potential buyers still worry about range, resale, and repairability. Overcoming that will take more than dollars; it requires trust, education, and experience."
In 2024, Australians bought 91,292 new battery electric vehicles (BEVs) - a 4.7% jump from the year before. That's progress, but it's still a fraction of total vehicle sales. At present EV sales represent only about 10% of new vehicle sales in Australia although that is expected to double.
The FBT exemption has undoubtedly boosted fleet and novated lease uptake, but there's room to go further. Greater public awareness and better communication about the benefits of salary packaging could accelerate this momentum.
According to WhipSmart, with broader awareness of salary packaging, EV adoption could potentially double in the coming years. The company calls on policymakers, businesses, and industry advocates to reframe EVs as accessible, long-term investments - not luxury items.
"The future of Australia's electrification is not just about handing out rebates," said Brown. "It's about driving real consumer change, removing cost barriers, and showing Australians that EVs are already the smarter, more affordable choice."
For those Interested in offering novated leasing to their staff or having it offered at their business, they may reach out to WhipSmart f
