Why a PHEV lease costs more than an EV lease at the same price
A battery EV under the LCT threshold is FBT-exempt, so the whole lease and running costs come out of pre-tax pay. A PHEV committed to from 1 April 2025 is treated like a petrol car: the employer would owe FBT on 20% of the car's value each year, so packaging providers have you pay that amount from after-tax pay instead (the Employee Contribution Method). On a $60,000 PHEV that's $12,000 a year that misses out on the tax saving. The GST saving on the price, lease payments and running costs still applies.
Which existing PHEV leases are still exempt
The ATO keeps the exemption going after 1 April 2025 only when both of these hold:
- The car was in use, or available for your private use, before 1 April 2025, and that use was exempt. The ATO has no discretion for delivery delays.
- A financially binding commitment to keep providing the car continues past that date. An option to extend isn't binding, so the exemption stops at the original end date even if you take the option.
It ends from the date of any new commitment: an optional extension, a break in the novation, a change to the lease payments or residual (adding accessories to the lease counts), or a change of employer, even within the same group. A change under a flexible service clause, an insurer's replacement car with the contract otherwise unchanged, or a transfer within the same employer doesn't end it.
Fuel vs electricity: why the battery share matters
A PHEV's official fuel figure assumes it starts with a full battery, so it looks very low. Day to day, cost depends on how many of your kilometres run on charge. At the default assumptions, a kilometre on petrol costs about 13.0c and a kilometre on home electricity about 5.9c. Change the battery share above to see the effect; the fuel and electricity figures are editable assumptions, not official rates.
What we assume
- Same drive-away price, lease rate, term and fixed costs for all three cars; only energy use and FBT differ.
- Non-exempt cars use post-tax contributions of 20% of the drive-away price each year, which fully offsets FBT.
- Lease, GST and residual mechanics match our novated lease calculator. The loan finances the full price with no balloon.
- A grandfathered lease is priced as exempt for the whole term; if something changes partway, the remaining years cost the non-exempt figure.
Frequently asked questions
Does my PHEV lease stay exempt if I take unpaid leave?
Only if the novation keeps running. In the ATO example, unpaid leave that ended the novation was a new commitment and the exemption stopped from that date. Prepaying the lease before the leave, so the novation never stops, kept it.
Is a PHEV a better novated lease than a petrol car?
For a new lease both pay the same FBT (a 20% statutory rate offset with post-tax contributions), so the difference comes down to price and running costs. The share of kilometres you drive on battery decides most of it; set it to what you'd do in practice, not the brochure figure.
Sources
Figures on this page come from the following primary sources. The date is when we last checked the page against the source.
- FBT on plug-in hybrid electric vehicles (ATO), checked 5 October 2026.
- Electric cars exemption (ATO), checked 5 October 2026.
- Luxury car tax rate and thresholds (ATO), checked 27 July 2026.
- Fringe benefits tax rates and thresholds (ATO), checked 25 August 2026.
- Car thresholds from 1 July (ATO), checked 27 July 2026.
- ATO ID 2002/1004: minimum residual values for leased cars (ATO), checked 27 July 2026.
- Reportable fringe benefits for employees (ATO), checked 25 August 2026.
Related calculators & guides
Novated lease calculator: any car, lease vs loan vs cash. Novated lease vs car loan: worked totals and questions to ask about a quote. EV FBT exemption: who qualifies and the 2027 changes. Novated leases and HECS: how reportable fringe benefits affect repayments.
Figures current as at 5 October 2026, verified against ATO published rates; see our methodology. General information only, not financial advice.