Plug-in hybrids were inside the electric car FBT exemption from the start. They stopped being inside it on 1 April 2025, and the way that change was written matters a great deal if you hold a PHEV lease — or are thinking about buying a used one.
If you are buying a used plug-in hybrid now and expecting to novate it, the answer is no. The transitional rule protects arrangements that were already running before 1 April 2025 and are financially binding. A new lease on a used PHEV is a new commitment, so there is nothing for the transitional to protect.
What changed, and where it is written
Schedule 2 of the Treasury Laws Amendment (Electric Car Discount) Act 2022 repealed the plug-in hybrid limb of the zero or low emissions vehicle definition, commencing 1 April 2025 and applying to benefits provided on or after that date.
The ATO puts it plainly: from 1 April 2025 a plug-in hybrid electric vehicle is not considered a zero or low emissions vehicle under FBT law, and is not eligible for the electric cars exemption. Battery electric and hydrogen fuel cell vehicles are unaffected by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) by this change — though the exemption for them is itself set to be replaced by a phased FBT discount from 1 April 2027 (announced in the 2026-27 Budget, not yet law; existing leases are said to be protected) — see the main FBT guide.
The transitional rule, and both halves of it
An existing arrangement can continue to be exempt, but the ATO requires two conditions, and both have to be satisfied.
- The car was used, or available for use, before 1 April 2025, and that use was exempt. The ATO says it has no discretion to extend this date, including where delivery was delayed by circumstances outside anyone's control. A car ordered in 2024 and delivered in May 2025 is outside the rule.
- There is a financially binding commitment to continue providing the car for private use on and after 1 April 2025. A commitment is an obligation to undertake a transaction that cannot be backed out of. An optional extension is not binding.
There is no fixed end date in the transitional. The exemption simply runs for as long as the pre-existing binding commitment runs.
The five things that break it
This is the part worth reading closely. The first four each create a new commitment, and the exemption ends from that date; the fifth means there was never a commitment for the transitional to protect, so the exemption stopped on 1 April 2025.
- Exercising an option to extend. The ATO's example: a three-year lease from 1 April 2024 to 31 March 2027 with an option for two more years is exempt to 31 March 2027 and not after — even if the option is taken up.
- A break in the novation. Unpaid leave that ends the novation ends the exemption. If the employee pre-pays and the novation does not stop, it is maintained.
- Changing the financial obligations. Altering lease payments or the residual value does it. In the ATO's example, adding a bull bar and luggage racks ended the exemption from that date. Using an existing flexible bundled-services clause — adding roadside assistance — does not.
- Changing employer. Any change of employer for FBT purposes ends it, even within the same group of companies. Redundancy followed by re-novation with a new employer ends it permanently.
- Never having a binding commitment in the first place. Pool cars with no designated employee, and employment contracts promising "a PHEV" without identifying a specific car and period, were never inside the transitional.
An insurance write-off replaced by a comparable vehicle on the same contract, at the same price and end date, does not break it. The ATO's full treatment is on its page for FBT on plug-in hybrid electric vehicles.
What this means for the used market
Two consequences follow, and they pull in opposite directions.
For buyers, a used plug-in hybrid is now priced as an ordinary car rather than as a tax-advantaged one. Whatever premium the exemption supported has gone, which is not a bad thing if you actually want a PHEV and can charge it — see whether a plug-in hybrid suits you.
For sellers, a PHEV coming off a novated lease is entering a market where the buyer cannot recreate the arrangement that made it attractive when new. Price accordingly.
What still applies to a PHEV
Losing the FBT exemption does not change anything else about the car. A plug-in hybrid still:
- Attracts whatever state stamp duty and registration treatment its emissions earn it — the state concessions guide has the detail, and the Northern Territory's concession expressly includes PHEVs.
- Has its home charging costs treated under the ATO's shortcut guideline, which has applied to PHEVs since 1 April 2024 using a method that apportions between electricity and petrol.
- Delivers its advertised economy only if it is plugged in regularly, which is the single biggest determinant of whether a PHEV is cheap to run.
If you hold a PHEV lease right now
Ask your salary packaging provider to confirm in writing that the car was used or available for use before 1 April 2025, and the exact date the current binding commitment ends. Then avoid anything on the list above until it does. If you are changing jobs, understand that the exemption will not survive it — that is the rule most people are caught by, and it is not discretionary.