Not every tax change arrives with a headline. Some of the ones that matter most to business owners are quieter, and they tend to surface at the worst possible moment, usually when a decision has already been made.
Here are three worth having on your radar right now.
1. The EV FBT concession is being scaled back, and timing matters
The Federal Government has announced a phased scale back of the fringe benefits tax concession for eligible electric vehicles.
How the phase down is expected to work:
- The current discount continues until 31 March 2027
- From 1 April 2027, EVs priced at $75,000 or less keep the full concession until 1 April 2029
- Higher priced eligible EVs below the luxury car tax threshold move to a 25% FBT discount from 1 April 2027
- From 1 April 2029, the full exemption disappears and a 25% discount becomes the standard outcome for eligible EVs below the LCT threshold
What this means in practice
If EV packaging is part of your remuneration strategy, or you have employees weighing up a novated lease, the timing of the decision now carries real financial weight. The detail around existing leases appears favourable, but the broader commercial impact will depend on how the final law is drafted.
Two practical points:
- The $75,000 price point becomes a genuine decision boundary, not just a number
- Reviewing upcoming EV and novated lease decisions early is far more useful than reviewing them after the arrangement is signed
2. The ATO has drawn a firmer line on personal services income
With the release of PCG 2025/5, the ATO has made its position clearer: passing the personal services business tests does not automatically remove Part IVA risk.
The focus is on arrangements where personal services income is split, retained or diverted in a way that looks tax driven rather than commercially justified.
Who should be paying attention
If you operate through a company or trust, and the income of that entity is closely tied to one individual’s labour, skill or expertise, this is worth a review. That covers a lot of professional services businesses, consultants, IT contractors, medical practitioners and tradespeople operating through structures.
The ATO has indicated that genuine efforts to move higher risk arrangements toward a lower risk position by 30 June 2027 will be relevant during the transition period. That is an invitation to act early rather than wait to be asked.
The takeaway is straightforward: if PSI is part of your structure, review it sooner rather than later. A structure that made sense when it was set up may not stand up to the ATO’s current framing, and the transition window is the cheapest time to fix it.
3. The cents per kilometre rate has moved
The ATO has set the cents per kilometre rate for the 2027 income year at 91 cents, up from 88 cents.
For anyone using their own car for work related travel, that increase slightly lifts the value of a claim under the cents per kilometre method.
The usual limits still apply:
- The claim is capped at 5,000 work related kilometres per car
- You still need a reasonable basis for how those kilometres are calculated
Do not default to the simple method
The cents per kilometre method is simple, which is exactly why it gets used by people who would be better off with the logbook method.
Where work related vehicle use is high, a valid 12 week logbook can allow a claim for the work related share of actual running costs including fuel, servicing, registration, insurance and decline in value. The trade off is more record keeping.
At 5,000 kilometres and 91 cents, the cents per kilometre method caps out at $4,550. If your genuine work related use is well above that, or you are running a newer vehicle with meaningful depreciation, the logbook method is likely to produce a materially better result.
Sometimes the biggest tax wins are not dramatic changes. They come from making sure the basics are claimed correctly and supported properly.
Frequently asked questions
Will the EV FBT changes affect a novated lease I already have in place? The detail around existing leases appears favourable, but the final position depends on how the legislation is drafted. If you have a lease in place or are about to sign one, it is worth confirming your position rather than assuming.
Does PCG 2025/5 mean my structure is wrong? Not necessarily. It means the personal services business tests are not a complete answer on their own. The question is whether the arrangement has a genuine commercial rationale beyond the tax outcome.
Can I switch between the cents per kilometre and logbook methods? You can choose the method that gives the better outcome, provided you meet the record keeping requirements for the method you use. That is the catch: you cannot decide to use the logbook method at tax time if you did not keep the logbook.
How long is a logbook valid? A valid 12 week logbook generally remains valid for five years, provided your circumstances and pattern of use have not materially changed.
Worth a conversation
Each of these changes is small enough to overlook and large enough to matter once a decision has been made. If you would like us to review your vehicle arrangements, your structure, or your work related expense claims, we can work through what applies to you.
Call us on +61 417 733 869 or get in touch.
This article is general information only and does not take your personal circumstances into account. Some measures discussed are announcements or draft guidance and are not yet final. Please contact us for advice specific to your situation.