Salary sacrifice vehicle

 Author: ExMember22(Champion)Champion

21 Oct 2025

Firstly, and most importantly, you (as an employee) don't pay FBT, your employer does.

However, employers often effectively pass on the cost of FBT to their employees under salary sacrifice vehicle lease arrangements (by deducting enough from the employees gross and/or net pay under their salary sacrifice arrangements to cover both the lease payments & any FBT).

(Eligible) Electronic Vehicles are currently FBT exempt (i.e. an employer doesn't pay FBT with respect to an employee's salary sacrifice arrangements for these vehicles).

However, how switching from an existing salary sacrifice arrangement to one for an Electric Vehicle would impact an employee's take home pay & income tax liability would vary considerably depending on the specific circumstances (e.g. an employer might deduct less for the sal sac from the employee's pay as they wouldn't need to deduct additional amounts to offset their FBT liability, but that will then mean the employee has a higher amount of wages included in taxable income and therefore pay more income tax; or if an employer never deducted additional amounts from the employee's pay to cover FBT under the old arrangement there may be little change).

Long story short, it can be quite complicated and difficult to determine or advise on. The only real way to get some certainty/a reliable indication is to get a quote (e.g.from a novated lease provider) & compare it to your current arrangement.

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