New Australian Taxation Office data, released under freedom of information laws, shows a large share of the subsidy is flowing to higher earners rather than average workers.
The figures reveal that 30.6% of novated leases taken out under the fringe benefits tax exemption to October 2025 go to motorists earning above $190,000 a year. Another 24% of leases are used by people earning between $135,000 and $190,000, putting more than half of beneficiaries in higher tax bands.
The policy exempts employers from paying fringe benefits tax on electric vehicles priced under the $91,387 Luxury Car Tax threshold when structured through a novated lease, allowing employees to package car costs from pre-tax income.
Under this arrangement, workers can bundle both the vehicle and its running costs into their salary package, cutting taxable income and reducing out-of-pocket expenses. Analysis from the e61 Institute suggests the benefit is substantial, with a $60,000 electric vehicle potentially delivering up to $5000 in tax savings a year for the driver.
Critics argue this design ties the size of the subsidy directly to income levels, so those on higher salaries receive the biggest boost, while people without access to salary packaging get nothing.
Policy analysts say this structure makes the fringe benefits tax exemption an expensive and uneven way to accelerate electric vehicle adoption across the fleet. The scheme skews towards well-paid employees in organisations that offer novated leasing, instead of providing a broad-based incentive for all car buyers.
That imbalance raises doubts about whether the program is delivering value for money, or entrenching a system where public funds disproportionately support wealthier motorists’ switch to electric cars.
