Toyota's first PHEV arrives — what it means for your novated lease
The 2026 Toyota RAV4 PHEV is finally here. Here's what Australian PAYG employees need to know about leasing it and whether the FBT exemption applies.
Toyota has spent decades selling hybrids by the millions, but it has taken until 2026 to release its first plug-in hybrid in Australia. The RAV4 PHEV is now officially here, and according to a hands-on review from EVcentral AU [Source 1], it's directly targeting the growing field of Chinese-brand PHEVs from GWM, Haval, and BYD.
For most car buyers that's just automotive news. For PAYG employees considering a novated lease, it raises a more pointed question: does the RAV4 PHEV qualify for the FBT exemption — and if so, how does it stack up against the competition on total cost?
What this means for novated lease customers
This is where it gets important. Under current Australian tax rules, the FBT exemption for eligible low-emission vehicles applies to battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) — but only until 1 April 2025, after which PHEVs lost their exemption status under the Treasury Laws Amendment (Electric Vehicle Home Charging) Act. That means the RAV4 PHEV, arriving in mid-2026, almost certainly does not qualify for the FBT exemption that applies to pure EVs.
That's not the end of the story, though. A novated lease on the RAV4 PHEV still delivers real pre-tax salary packaging benefits — you're still using pre-tax dollars to cover running costs and the vehicle itself. The exemption just means you won't get the full FBT-free treatment that a BEV like a Tesla Model 3 or BYD Seal would attract. If you're weighing up a PHEV versus a full EV under novated leasing, this distinction matters a lot to your bottom line.
On the competitive side, the EVcentral review [Source 1] positions the RAV4 PHEV against GWM Haval and BYD alternatives — several of which are BEVs and therefore still FBT-exempt. Before you default to Toyota brand loyalty, it's worth running the numbers on what an equivalent BEV actually costs you after tax advantages. The potential savings difference between an FBT-exempt BEV and a non-exempt PHEV under novated leasing can be significant over a three-to-five-year term.
Common questions
Does the 2026 Toyota RAV4 PHEV qualify for the FBT exemption?
Almost certainly not. The FBT exemption for PHEVs ended on 1 April 2025 under Australian tax law. Only battery electric vehicles (BEVs) remain eligible for the full FBT exemption after that date. You should confirm the exact eligibility of any specific vehicle with a licensed adviser before signing.
Can I still novated lease a RAV4 PHEV?
Yes — PHEVs are still eligible for novated leasing. You'll still use pre-tax salary to cover the lease and many running costs. You just won't receive the full FBT exemption benefit that a pure EV attracts, so the tax advantage is smaller.
How does the RAV4 PHEV compare to BYD or GWM alternatives under a novated lease?
If the BYD or GWM alternative is a full BEV, it's likely to come out ahead on after-tax cost under a novated lease purely because of the FBT exemption. Brand preference and practical factors like range and charging still matter, but the tax treatment should be a central part of your comparison.
What's the difference between a PHEV and a BEV for novated leasing purposes?
A BEV (battery electric vehicle) runs solely on electricity and currently attracts a full FBT exemption in Australia. A PHEV has both an electric motor and a petrol engine — it lost its FBT exemption status from 1 April 2025, meaning FBT is payable on the vehicle's benefit value.
Should I wait for a pure EV from Toyota instead?
That depends on your driving needs and timeline. If maximising the tax benefit under your novated lease is a priority, a BEV — from Toyota or any other brand — is worth serious consideration. Talk to a novated lease specialist who can model both scenarios for your salary and usage.