Fringe Benefits Tax (FBT) is a tax paid by employers on certain benefits they provide to their employees in addition to their salary or wages. One of these benefits is the provision of a car for the employee's personal use, which is subject to FBT. However, with the increasing popularity of electric vehicles (EVs), the Australian government has introduced some changes to the FBT rules regarding these vehicles.

Firstly, EVs are generally exempt from the luxury car tax, which can make them more attractive because they can be cheaper. Additionally, the government has introduced some incentives to encourage the uptake of EVs, which helps to reduce FBT liability.

One of these incentives is the reduced FBT rate for EVs. Currently, the FBT rate for cars is 20%, but for EVs, it is reduced to 0% for vehicles purchased after 1st July 2022.

The FBT rules for electric vehicles can offer some significant tax advantages for employers. With the reduced FBT rate, EVs can be an attractive option for employers looking to provide a benefit to their employees. However, it's important to seek professional advice to ensure compliance with the rules and regulations, as there are some quirks that you need to be aware of including definitions and dates before you can claim FBT Exemptions.

Here's some of the technical stuff: 

The FBT Act S.8A(1) provides that a car benefit is an exempt benefit in relation to a year of tax if all of the following requirements are satisfied:

1. The car benefit is provided in the year of tax in respect of the employment of a current employee. This means the car benefit can be provided to an employee or their associate (e.g., spouse) but does not apply to a future or former employee.

2. The car benefit was provided on or after 1 July 2022.

3. The car is a ‘zero or low emissions vehicle’ when the benefit is provided.

4. The first time when a person both held and used the car was on or after 1 July 2022.

5. No amount of luxury car tax (within the meaning of A New Tax System (Luxury Car Tax) Act 1999) has become payable on a supply or importation of the car before the benefit is provided

A zero or low emissions vehicle is a Battery electric vehicle, a hydrogen fuel cell electric vehicle, or a plug-in hybrid electric vehicle.

To ensure that your tax obligations are met and your risk of paying FBT is reduced, it's important to seek professional help. Our team of tax experts is ready to assist you with any tax-related issues, including FBT on electric vehicles. Don't hesitate to book a tax help session with us and let us guide you through the complexities of the tax system. Contact us today to schedule your appointment.

For more information on how we can help your business with this, please reach out on 08 9185 9400 or email [email protected].