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:
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:
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.
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 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.