We have recently recruited a new employee from the private sector who was being provided with an exempt car benefit via novated lease being a plug-in hybrid car entered into before 1 April 2025. Is it correct that the FBT exemption is lost if we agree to take over the novated lease as the new employer?
Subject to transitional rules, the FBT exemption for plug-in hybrid cars ceased as at 1 April 2025.
The transitional rules provide that you can keep applying the exemption on and after 1 April 2025 only if both of these requirements are met:
If that commitment is changed, renewed or replaced on or after 1 April 2025, the exemption stops from the date of the new commitment.
In this case, the act of leaving their current employment and recommencing a novated lease with you will result in the existing financially binding commitment of the former employer ceasing and a new one being entered into with the new employer meaning the FBT exemption is lost.
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