In a measure to reduce emissions and reduce Australia's carbon footprint, the Federal Government's proposed Treasury Laws Amendment (Electric Car Discount) Bill 2022 has passed Parliament, with Fringe Benefit Tax (FBT) exemptions for electric cars now law.
From 1 July 2022, employers will not pay FBT on eligible electric cars and associated car expenses, where the following criteria is satisfied:
- The car first held (owned/leased) and first used on or after 1 July 2022; and
- The car's value as at the first retail sale must be below the fuel-efficient vehicles' luxury car tax threshold, being $84,916 in the 2022/23 Income Year; and
- The car must be a zero or low-emissions vehicle, which includes:
- battery electric vehicles; or
- hydrogen fuel cell electric vehicles; or
- plug-in hybrid electric vehicles
- The car must use one or more electric motors for propulsion; and
- The car must be fueled by either an off-vehicle electrical power source, a battery, an electric generator, a hydrogen fuel cell, or a combination of these.
Benefits provided under a salary sacrificing arrangements are included in the exemption.
In relation to associated car expenses, the following car expenses are exempt from FBT if they are provided for an eligible electric car:
- Registration
- Insurance
- Repairs or maintenance
- Fuel (including electricity to charge and run electric cars)
It's important to note that a home charging station is not a car expense associated with providing a car fringe benefit for electric cars. However, it may be a property or expense payment fringe benefit.
The exemption does not cover vehicles other than "cars" as defined for FBT purposes. As such, vehicles designed to carry one tonne or more, or nine passengers or more, will not qualify for the exemption. Motorcycles and scooters are not classified as cars for FBT purposes and do not qualify for the exemption, even if they are electric.
Reportable Fringe Benefits
Although the legislation removes FBT on eligible electric cars, employers still need to include the value of the exempt car fringe benefits when calculating an employee's reportable fringe benefit amount.
The Government will review the operation of the concession after three years to assess the electric car take up/
For More Information
For more information or for assistance in assessing FBT exemptions for electric cars, please contact the Adviser team at Archer Gowland Redshaw on (07) 3002 2699 | info@agredshaw.com.au.
