The National Automotive Leasing and Salary Packaging Association (NALSPA) has presented a clear case to the Federal Government for reforming novated leasing and salary packaging to support Australia’s productivity growth, cost of living relief, and emissions reduction targets.
In its 2025 submission to the Treasury’s Economic Reform Roundtable, NALSPA outlines how novated leasing has become one of the most effective demand-side incentives for fleet modernisation and vehicle electrification, especially through the Fringe Benefits Tax (FBT) exemption on electric vehicles.
Here are the key recommendations from NALSPA that Fleet Managers and employers should be aware of:
1. Reinstate the FBT Exemption for Plug-in Hybrid Electric Vehicles (PHEVs)
NALSPA is calling on the Government to reinstate the Electric Car Discount (FBT exemption) for PHEVs, which ended in April 2025. The Association argues that PHEVs are a vital transition technology, especially in regions where public or private charging infrastructure remains limited.
“PHEVs provide immediate productivity gains through lower operating costs, reduced maintenance requirements and enhanced fuel efficiency,” the submission states.
From a fleet perspective, PHEVs offer flexibility, supporting lower emissions while maintaining the range and refuelling convenience of internal combustion engines. Their reinstatement would:
- Lower total cost of ownership for fleet buyers and novated lease customers.
- Improve energy security by reducing reliance on imported fuels.
- Provide resilience in the supply chain during infrastructure rollout.
- Accelerate modernisation of legacy ICE fleets.
NALSPA has urged that PHEVs should be evaluated not only on direct CO₂ abatement cost, but also on broader system-level benefits like improved air quality, reduced road maintenance, and support for Australia’s 2030 emissions targets.
2. Make it Easier to Package Charging Infrastructure
To remove one of the biggest barriers to EV adoption for individuals using novated leasing, NALSPA recommends allowing home EV charger installation costs (typically $1,500–$2,500) to be salary packaged FBT-free.
This would be a major benefit for novated lease customers who are transitioning to EVs under the current FBT exemption and are now grappling with the cost of hardware installation at home.
For fleet buyers, this recommendation would:
- Reduce reliance on public infrastructure for at-home charging.
- Improve take-up rates of EV novated lease programs.
- Increase operational uptime by enabling overnight charging.
3. Remove RFBA Reporting for Fully Exempt EVs
Currently, even if an EV is exempt from FBT under the Electric Car Discount, the benefit must still be reported on the employee’s payment summary as a Reportable Fringe Benefit Amount (RFBA). NALSPA argues that this administrative requirement undermines the intent of the exemption and creates unnecessary complexity for payroll and HR teams.
Removing RFBA reporting for FBT-exempt EVs would:
- Streamline the novated leasing process for employers and salary packaging providers.
- Remove confusion for employees during tax time.
- Reinforce the policy signal that zero-emission vehicles are a national priority.
4. Enable Salary Packaging of E-Bikes and Public Transport
NALSPA proposes a full FBT exemption for salary packaging of e-bikes (without current home-to-work restrictions) and a concession or exemption for public transport expenses.
While not a direct fleet vehicle issue, this recommendation would support broader decarbonisation goals for organisations with travel and mobility policies. The proposed benefits include:
- Reducing congestion and parking demand.
- Supporting staff health and wellbeing.
- Offering low-cost transport options for urban staff with short commutes.
For larger organisations or local governments, salary packaging e-bikes could reduce the demand for pool vehicles and lower reimbursement costs for work-related travel.
5. Extend FBT Exemption to More Public Sector Workers
Currently, Public Benevolent Institutions (PBIs) can access broader salary packaging benefits. NALSPA is recommending the extension of similar benefits to teachers, healthcare workers, law enforcement, and emergency services employees—sectors that are vital but often face workforce retention challenges.
For state and local government fleet buyers, this could make novated leasing more attractive to staff, especially if supported by clear policies on car eligibility, charging access, and salary packaging arrangements.
Why This Matters to Fleet Managers
The NALSPA submission reinforces what many Fleet Managers already know—novated leasing has evolved from a niche tax tool into a critical mechanism for modernising Australia’s vehicle fleet.
Key implications for fleet decision-makers:
- Monitor policy developments: The reinstatement of the PHEV FBT exemption could shift TCO calculations, especially for mixed-use or rural fleets.
- Update salary packaging offers: Home charging integration and RFBA simplification would increase the appeal of EV novated leases to employees.
- Support internal alignment: These proposed reforms highlight the need for collaboration between fleet, HR, finance, and sustainability teams.
- Plan for operational flexibility: PHEVs remain a viable bridge technology as infrastructure catches up to EV ambitions—especially in regional and high-utilisation fleets.
As Australia’s fleet landscape continues to shift under the influence of emissions regulations, energy security concerns, and staff mobility preferences, novated leasing remains a powerful lever—when supported by well-designed tax policy.
The Government’s response to NALSPA’s recommendations could determine whether the FBT system continues to be a driver of positive change, or a barrier to widespread EV adoption.
Fleet Managers should keep a close eye on how these proposals are received at the national level. The path to net zero and operational efficiency might just be shaped by the salary packaging rules set in Canberra.
