From 1 July 2022 employers do not pay FBT on eligible electric cars and associated car expenses.
The exemption is intended to encourage a greater take up of fuel-efficient cars and reduce Australia’s carbon emissions.
The exemption applies to the following cars:
– Battery electric vehicles
– Hydrogen fuel cell electric vehicles
– Plug-in hybrid electric vehicles.
There are a few key points to keep in mind:
– Cars must be valued below the luxury car tax threshold, which is $84,916 for the 2022-23 financial year.
– Unlike other exemptions, the value of the exempt car benefit will be included in an employee’s reportable fringe benefits amount.
Under the new rules, employers could save up to $12,500 on the cost of an electric vehicle package for an employee, while individuals could save $4300 on the purchase of a $64,000 vehicle, according to Treasury estimates.
The exemption is also available for vehicles that are salary packaged. It’s a great opportunity for employees to salary package these cars, which can result in significant savings for them.
The FBT exemption will apply to 1 April 2025 for plug-in hybrid electric cars. The government review the exemption within three years to assess whether it will continue.
Contact our team today if you’d like to know more or see the details on the Australian Taxation Office website.