2026–27 Federal Budget affects employers in two distinct but related ways.
First, the FBT treatment of electric vehicles is changing, and the timing of when an arrangement starts now has a direct effect on the tax outcome.
Second, the Budget confirms continued investment in ATO fraud prevention and real-time compliance monitoring. For employers, that means payroll, BAS and portal access controls all need to be in order.This blog covers both areas. If you are also thinking about broader cash-flow planning for your business, read our companion blog on instant asset write-offs, loss carry-back and PAYG instalments.
EV FBT Concession Is Not Permanent in Its Current Form
Electric vehicles became an attractive salary packaging option partly because of the FBT exemption available for eligible electric cars. That concession is not disappearing entirely, but it is changing, and the timing of your arrangement now matters significantly.
What the Budget confirms
Points to Note
- From 1 April 2027, a 25% discount will apply to the FBT statutory formula rate for eligible electric cars over the fuel-efficient luxury car tax threshold
- Electric cars valued at up to $75,000 may continue to receive the full FBT exemption if the fringe benefit arrangement commences before 1 April 2029
- From 1 April 2029, the 25% FBT discount is expected to apply more broadly to eligible electric cars
What this means in practice
If a business or employee is considering a novated lease or employer-provided EV, the start date of the arrangement now determines whether the full exemption or the reduced discount applies.An arrangement starting before 1 April 2029 on a car valued at $75,000 or under may retain the full FBT exemption. An arrangement on a car over that value, or one starting after the key dates, will move to the 25% discount model.
What employers should review now
Key Points to Review
- The value of any proposed EV against the $75,000 threshold.
- When any new arrangements are expected to start.
- Whether existing novated lease arrangements are properly documented.
- Whether employees in current arrangements are within the eligible value range.
- Whether charging reimbursements and other associated costs are being treated correctly for FBT purposes.
- Whether reportable fringe benefits amounts are being captured accurately in STP reporting.
Before packaging or purchasing an EV, consider:
Key Business Considerations
- Whether the vehicle is genuinely needed for business or employee benefit purposes.
- Whether the arrangement start date falls before or after the relevant Budget dates.
- Whether logbook or other records should be maintained for private-use apportionment.
- Whether the FBT, GST, depreciation and cash-flow impact have been reviewed together.
- Whether the salary packaging arrangement still makes commercial sense under the new settings.
An EV concession can still be a useful part of an employee benefits package, but the rules are now more time-sensitive. The question is not just “does the tax look good?” It is whether the vehicle, the timing, and the arrangement structure all work together.
ATO Is Investing in Real-Time Compliance Monitoring
The Budget allocates $86.3 million over four years from 1 July 2026 plus ongoing funding from 2030–31, for Phase 2 of the ATO’s Counter Fraud Strategy.
This is not a general compliance announcement. It specifically includes:
Key Compliance Measures
- Live monitoring of fraudulent account access affecting tax agents, businesses and superannuation accounts.
- Strengthened ability to detect and prevent fraud involving tax agents and other intermediaries.
- Real-time detection across tax and superannuation systems.
What this means for employers
For most businesses, this is not about fraud in the traditional sense. It is about the quality, accuracy and security of the information going to the ATO.Errors in payroll records, inconsistencies between STP data and tax returns, unauthorised access to ATO accounts, and unsupported refund or credit claims are all areas that increased monitoring will surface faster.
Compliance areas to review now:
Key Internal Review Areas
- Who has access to ATO online services and business portals.
- Whether tax agent and BAS agent authorisations are current and belong to authorised individuals only.
- Whether director and business contact details on ATO records are correct.
- Whether payroll records agree with STP, PAYG withholding and superannuation records.
- Whether BAS lodgements are consistent with accounting records.
- Whether employee benefits — cars, reimbursements, entertainment and utilities — have been identified and captured for FBT purposes.
- Whether internal approval processes exist before changing bank account details or lodging refund claims.
- Whether any suspicious access or account activity would be detected quickly.
FBT as a compliance area
FBT is consistently an area where employers fall short, not through dishonesty, but because benefits are not always identified before FBT return time.
A car provided to an employee. A tool of trade that also gets used privately. Reimbursements that cross into the benefit category. Meal entertainment expenses. These situations come up in ordinary business operations and they need to be captured and documented correctly.The ATO’s increased monitoring makes timely and accurate FBT review more important, not less.
What Employers Should Do Before the Next FBT or Payroll Review
The combination of EV FBT changes and stronger ATO compliance monitoring creates a clear action item for employers: tighten up the records and review the arrangements.
Before the next FBT return or payroll review, businesses should check:
Key Year-End Review Areas
- Whether all employee benefits have been identified across the full year.
- Whether cars, utilities, reimbursements and entertainment are being captured correctly.
- Whether existing EV arrangements are documented and the timing understood.
- Whether proposed EV arrangements account for the Budget’s date-based rules.
- Whether STP, PAYG withholding and superannuation records are consistent.
- Whether ATO portal access is restricted to authorised individuals.
- Whether tax agent and BAS agent details are current.
- Whether internal processes exist for approving lodgements, refunds and account changes.
The Budget’s business measures improve cash flow — but strong compliance is what protects the business when the ATO looks closely.
For SME cash-flow measures from the same Budget including the instant asset write-off and PAYG instalment changes, see our blog on Federal Budget 2025–26 cash flow and tax planning.If your business is held through a discretionary trust or you hold investment assets outside the business, the Budget also proposes significant changes to trust taxation and CGT — see our blog on structures, property and capital gains.
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