Cars Exempt from FBT

While employers are obligated to pay Fringe Benefits Tax (FBT) on cars they provide to their employees for private use, there are some exceptions to this rule.In this guide we explain what the exemptions are, including the vehicle types and situations they apply to. 

If you need more information on general rules and guidelines on FBT, please go to our detailed guide. We also have a guide on EV FBT exemptions.

Conditions for a Fringe Benefits Tax exemption

The table below summarises the different types of vehicles that are exempt from FBT and the relevant conditions that apply. 

Luxury Car Tax (LCT)

It’s important to note that for any vehicle to be exempt, it must be below the Luxury Car Tax (LCT) threshold.
For the 2024-25 financial year, the LCT limits (GST-inclusive) are $91,387 for fuel efficient cars and EVs, and $80,567 for all other cars.

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FBT exemption for limited private use

An exemption applies where there is limited private use of a vehicle by an employee, regardless of the type of vehicle it is.

It applies when the vehicle is used in one of the following circumstances:

• To travel from home to work and back
• For incidental travel related to their job, or
• For minor, irregular or occasional private use (the ATO legal database provides more detail regarding the definition of ‘minor use’).

If an exemption is granted, it also applies to use of road or bridge tolls, and to minor or occasional use of the vehicle by the employee’s partner or associate.

However, for the exemption to apply, the following conditions must be met:

• The vehicle is provided principally for the employee to perform their work duties.
• The vehicle is not part of a salary sacrifice arrangement.
• Any ‘diversions’ on the way to or from work by the employee (e.g. for errands) add up to no more than 2km each time.
• Private travel use does not exceed 1,000 km per FBT year, and no journey exceeds 200kms return.
• The employer has a policy in place limiting private use of the vehicle, and has received assurances from the employee that they will comply with this. 

Exemption for EVs

The FBT exemption for electric vehicles comes with several conditions. 

This includes that the car was held and used on or after 1 July 2022 and is a low-emissions vehicle. Luxury tax must also never have been paid on the vehicle. See the table above for a full list of the eligibility criteria. 

FBT exemption for PHEVs

While the same exemption applies for PHEVs as for all other EVs, from 1 April 2025 only fully electric vehicles will be exempt. 
However, for PHEVs bought before 1 April 2025 under a financially binding agreement that ends after that date, the exemption may still apply until the agreement ends. If the agreement is extended, the exemption will no longer apply.

Exemption for non-EVs

The types of non-electric vehicles that may be exempt from FBT include single and dual cab utes, panel vans, goods vans, 4-wheel drives, modified vehicles (e.g. hearses), taxis, and other vehicles that carry loads of at least one tonne or 8 passengers.

The carrying capacity of a ute can be calculated by taking the ‘gross vehicle weight’ (from the compliance plate) and subtracting the ‘basic kerb weight’ (which includes fuel, fluids and accessories). 

A full list of vehicle types is shown in the table above, along with any conditions that apply. 

Note: It’s important that the vehicle in question is used principally for work purposes, with limited private use at most, and that the employer can show evidence of this to the ATO if asked.

Car models exempt from FBT

Below is a sample list of the some popular models that may be exempt from FBT, depending on how they are used. 

Electric vehicles (EVs)

BMW iX 1 / 2 / 3
BYD Dolphin
Ford Mustang Mach-E
Fiat 500e
Hyundai Ioniq 5 & 6
Kia EV6
Lexus UX 300e
Mercedes EQA 250
MG4
Mini Electric
Nissan Leaf
Peugeot e2008
Tesla Models 3 & 4
Volvo C40 Recharge

Plug-in hybrid EVs/PHEVs (eligible for exemption until 1 April, 2025)

Alfa Romeo Tonale PHEV
Ford Escape PHEV
Kia Sorento PHEV
Mitsubishi Outlander PHEV
Peugeot 308 / 508 PHEV

Non-EVs*

Isuzu D-Max
Iveco Daily
Nissan Navara BT50
Ford Ranger
Mazda BT-50
Toyota Hilux

*Note that in some cases the calculated carrying capacity of the vehicle may be under 1 tonne, in which case it would not be FBT exempt.

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