Fringe Benefits Tax and Electric Vehicles

BRISBANE, Australia - EntSun -- The Fringe Benefits Tax (FBT) year ends on 31 March. In this article we discuss how it may affect the use of electric cars.

FBT Exemption for Electric Cars

Employers that provide employees with the use of eligible electric vehicles (EVs) can potentially qualify for an FBT exemption. This should normally be the case where:

*The car is a zero or low emission vehicle (battery electric, hydrogen fuel cell or plug-in hybrid electric);
*The car is both first held and used on or after 1 July 2022; and
*The value of the car is below the luxury car tax threshold for fuel efficient vehicles (which is $89,332 for 2024-25 financial year).

Plug-in hybrid vehicles no longer FBT exempt

From 1 April 2025, plug-in hybrid electric vehicles will no longer qualify for the FBT exemption unless:

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*The use of the vehicle was exempt before 1 April 2025, and
*There is a financially binding commitment to continue providing private use of the vehicle on and after 1 April 2025.

If there is a break or change to that commitment on or after 1 April 2025 then the exemption normally won't be available any more.

Working with the exemption

Even if the FBT exemption applies, your business will still need to work out the taxable value of the benefit as if the FBT exemption didn't apply. This is because the value of the exempt benefit is still taken into account when calculating the reportable fringe benefits amount of the employee. While income tax is not paid on this amount, it can impact the employee in a range of areas (such as the Medicare levy surcharge, private health insurance rebate, employee share scheme reduction, and social security payments).

To learn more about Fringe Benefits Tax and your business, contact us, or visit us in person at our office in Stafford, Queensland. https://mcfillin.com.au/