If your business provides vehicles to employees that are used privately, you must consider Fringe Benefits Tax (FBT). Many small businesses unintentionally under-report or overlook FBT on cars used for personal trips, commuting, or private errands. The ATO expects you to:
- Identify all work-related vehicles provided to employees
- Assess whether private use creates an FBT liability
- Keep clear records (including logbooks where applicable)
- Lodge an accurate FBT return on time each year
Getting this right protects you from penalties and ensures your FBT disclosure is correct for both tax and payroll reporting.
FBT exemption for eligible electric vehicles (EVs)
Since 1 July 2022, the ATO has an FBT exemption for certain electric vehicles used by employees. This incentive is designed to support the uptake of low-emission vehicles. The FBT exemption can apply when:
- The EV is first held and used on or after 1 July 2022
- The vehicle is provided to a current employee or their associate
- It is used or available for private purposes
Vehicles that may qualify include battery electric vehicles (BEVs), hydrogen fuel cell vehicles and some plug-in hybrid EVs that meet eligibility rules. Associated costs such as charging, registration, insurance, repairs and maintenance related to the exempt EV can also be exempt from FBT. Even with the exemption, the benefit must be calculated and reported as a reportable fringe benefit on income statements, which can affect employee entitlements like Medicare levy surcharge, child support and government benefits. (Australian Taxation Office)
NSW electric vehicle fleet funding (from $5,000)
The NSW Government currently offers EV fleet incentives to help businesses transition to electric vehicles:
- Funding ranges from $5,000 for passenger BEVs and light commercials (RRP ≥ $40,000) to up to $50,000 for heavy vehicles depending on vehicle type. (NSW Government)
- The grants support procurement of eligible battery EVs and smart charging infrastructure for business fleets. (NSW Government)
- The program is open to ABN-holding businesses with existing fleets and has specific eligibility requirements. (NSW Government)
(Contrary to some past incentives that provided rebates on EV purchases, no general $3,000 vehicle rebate for new EV purchases is currently open for new vehicles, though past purchases may still be eligible under earlier schemes.) (Energy.gov.au)
Incentives in other states (overview)
State incentives across Australia vary and many traditional monetary rebates for EV purchases have ended. For example, several states previously offered purchase rebates of a few thousand dollars, but most of these have closed and there are no equivalent ongoing nationwide EV purchase grants at this time. (Carsales)
Some states still provide concessions on stamp duty or registration fees for EVs, and other targeted programs exist, but businesses should check the latest information directly with state authorities or your adviser before making purchasing decisions.
What your business should do
- Review your FBT position on all work vehicles each FBT year
- Seek professional advice on whether an EV qualifies for the FBT exemption
- Consider whether EV fleet funding in NSW could support EV adoption
- Confirm up-to-date incentives in your state before committing to purchases
If you’re unsure about your FBT reporting or eligibility for grants and exemptions, talk to your tax agent to make sure you’re compliant and maximising available incentives.
EV Fleets Incentive Kick-start funding FY26 | NSW Government
Date published 27 Feb 2026 | Last updated 27 Feb 2026
