Electric bikes have become a common sight on commuter routes, and a new ATO class ruling suggests they can also be packaged through an employer without Fringe Benefits tax, provided private use stays limited. The ruling, CR 2026/82, treats an e-bike as a motor cycle rather than a car. That matters now because Parliament is weighing a cap on the separate FBT exemption for electric cars.

What the ATO ruled

Class Ruling CR 2026/82 was issued on 21 October 2026 for Urban Mobility Pty Ltd. It covers an employee's use of an electric bicycle provided under a salary packaging arrangement.

The ruling applies from 1 April 2026 to 31 March 2030, which spans four FBT years.

The ATO's core finding is that, under the arrangement described, the e-bike does not give rise to a car fringe benefit, because an e-bike is a motor cycle and not a "car" for FBT purposes.

The ATO also found there is no expense payment benefit and no property benefit. Instead, a residual fringe benefit arises from the employee's use of the bike.

Under the scheme, the employee leases an e-bike as part of salary packaging. A deed of novation then shifts the Lease payments to the employer for a term of between 12 and 48 months.

The e-bike is fully maintained and insured under the arrangement.

In effect, the employer meets the lease payments while the employee gives up an equivalent amount of salary, which is the standard structure behind many novated lease arrangements.

Because the bike is maintained and insured as part of the package, the employee's ongoing costs are largely bundled into the lease payments rather than paid separately from after-tax income.

When the benefit is FBT-free

The key to the exemption is s 47(6) of the Fringe Benefits Tax Assessment Act. That provision can exempt the residual benefit from using certain vehicles that are not cars, as long as private use is restricted.

According to the ruling, the residual benefit is exempt if the employee's private use of the e-bike is limited to:

  • travel between home and work;
  • travel that is incidental to travel in the course of employment; and
  • non-work use that is "minor, infrequent and irregular".

Commuting is the important part. Ordinarily, travel between home and work is private travel, but under this exemption it does not count against the employee.

What would put the exemption at risk is regular weekend or recreational riding that goes beyond minor, infrequent and irregular use.

Where private use goes beyond those limits, the benefit is not exempt and must be valued.

The ruling says the taxable value can be worked out using either the operating cost method or the cents-per-kilometre method. For the FBT year that started on 1 April 2026, the cents-per-kilometre rate is 20 cents per kilometre under TD 2026/1.

Hypothetical example: commuting versus weekend rides

Hypothetical example: an employee packages an e-bike under an arrangement that matches the one in the ruling. She rides 10 kilometres each way to work, four days a week, for 46 weeks of the year.

That is 10 x 2 x 4 x 46 = 3,680 kilometres of home-to-work travel. Because that travel falls within the exemption, it does not create a taxable fringe benefit, provided her other private use is minor, infrequent and irregular.

Now suppose a different employee also uses the bike for long weekend rides every week, adding 1,500 kilometres of private travel over the FBT year. That pattern is unlikely to be minor, infrequent and irregular, so the exemption may not apply.

Using the cents-per-kilometre method, those 1,500 private kilometres would broadly produce a taxable value of $300 (1,500 x $0.20), before any reduction for employee contributions.

On the salary side, if a lease cost $1,800 a year and was paid from pre-tax salary, an employee on a 30% marginal rate plus the 2% Medicare levy would pay $576 less income tax ($1,800 x 32%), before fees and any other effects. The figures are illustrative only.

The limits of a class ruling

A class ruling is binding on the ATO, but only for the scheme exactly as described in the ruling and only for the participants it covers.

If an employer's arrangement differs, for example in how the lease is structured or who owns the bike, the ruling may not protect it.

The ATO also makes clear that a class ruling is not an endorsement of the product or of the provider.

For employers, the practical question is whether they can be confident private use stays within the limits. Some may ask employees to confirm how the bike is used, or set out the conditions in the packaging agreement, since the FBT Liability would fall on the employer if the exemption did not apply.

Salary packaging can also have wider effects on an employee's overall pay arrangements, depending on individual circumstances and employment terms.

How it compares with electric cars

The e-bike ruling arrives as the separate FBT exemption for electric cars is being reshaped.

The Treasury Laws Amendment (Tax Reform No. 4) Bill 2026 would cap the electric car FBT exemption at $75,000 from 2029. That measure is a bill before Parliament and is not yet law. The bill was reported to have passed the House of Representatives on 29 October, with the government reportedly aiming for Senate passage in the third week of November.

The e-bike treatment does not rely on that exemption at all. It rests on the long-standing exemption for vehicles that are not cars, combined with limited private use.

Key dates and what to watch

  • Now to 31 March 2030: CR 2026/82 applies to arrangements matching the ruling.
  • 31 March 2027: the current FBT year ends. Records of how the bike is used can help show the exemption applies.
  • Tax Reform No. 4: watch the Senate's handling of the bill and the proposed $75,000 electric car cap from 2029.
  • More rulings: watch whether other e-bike providers seek class rulings on similar arrangements, which would show whether this becomes a mainstream salary packaging option.