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.