FBT And Electric Vehicles

Fringe Benefits Tax (FBT), Electric Vehicles and You!

Since we are approaching the end of the FBT year, let’s educate ourselves on the new update to the FBT Exemption for electric vehicles.

The Bill containing the FBT exemption for electric vehicles passed through Parliament on 28 November 2022.

In order to qualify for the exemption, the vehicle needs to be classified as a car (i.e., designed to carry a load of less than 1 tonne and fewer than 9 passengers). It also needs to be classified as a zero or low emissions vehicle, which would typically include:

• Battery electric vehicles;
• Hydrogen fuel cell electric vehicles; and
• Plug-in hybrid electric vehicles.

Conditions

Timing

• Some amendments were made to the Bill to ensure that the exemption for plug-in hybrid electric vehicles will only apply for a limited period of time – expiring on 31 March 2025.

• The exemption is only intended to apply in situations where the car is first held and used on or after 1 July 2022. Provided the conditions of the exemption are met, an electric car that was ordered prior to 1 July 2022 but was not delivered until after 1 July 2022 would be eligible for the exemption (even if an employer acquired legal title to the car before 1 July 2022). However, a car delivered prior to 1 July 2022 would not qualify. A second-hand electric car may qualify for the exemption, provided that the car was first purchased new on or after 1 July 2022.

Costs and Business Structure

• The value of the car at the first retail sale must be below the luxury car tax threshold for fuel efficient vehicles ($84,916 in 2022-23).
• If an electric car qualifies for the FBT exemption, then associated benefits relating to running the car for the period the car fringe benefit is provided can also be exempt from FBT.
• The concession would not really help sole traders or partners in a partnership unless they provide a car to other employees as a fringe benefit.

Did You Know?

The Federal Government is not alone in using concessions to encourage electric vehicle ownership.

ACT

The ACT Government offers a stamp duty exemption on new zero emission vehicles, and up to two years free registration for new or second hand zero emission vehicles (registered between 24 May 2021 and before 30 June 2024).

New South Wales

Reimbursement of stamp duty paid on purchases of new or used full battery electric vehicles (BEVs) and hydrogen fuel cell electric vehicles (FCEVs), with a dutiable value up to and including $78,000. You can apply for a refund for vehicles registered between 1 Sept 2021 and 14 August 2022. The reduction is automatically applied from 15 August 2022.

Need a hand with any of the above FBT related topics? Contact our team to discuss options on 02 6260 4994 or visit our website for a list of service offerings.