Electric Cars Are Exempt From FBT
Yes, you are reading that right. Labour government has introduced a new bill to the house of representatives to remove fringe benefit tax on electric cars provided to employee for private use.
Only certain electric cars will be eligible for the exemption which are:
A battery electric vehicle
A hydrogen fuel cell electric vehicle
A plug-in hybrid vehicle
Eligible electric vehicles are zero or low emission vehicles, as well as the cost of vehicle must not exceed the luxury car limit which is $84,916 for the year ending 30 June 2023.
The exemption starts from 1 July 2022. In practical, car needs to be first held and used on or after 1 July 2022. If employer purchased or leased an electric car and provided it to employee for private use prior to 1 July 2022, those cars would not be exempt from FBT. However, where eligible electric cars were order prior to 1 July 2022, but delivered on or after 1 July 2022, the exemption will apply. Also, eligible car does not have to be brand new, exemption applies to second hand certain electric cars.
The example provided in the proposed bill is that an employer can save $90,000 FBT annually for a vehicle cost $50,000 and employee saving of $4,700 annually when salary sacrificing the same vehicle.
This bill has been received popularity since it was announced on 27 July in the situation currently with historically high petrol price and rising living cost. Government also tries to push the take up of electric vehicle to combat climate change and remission reduction.
Need Cordner Advisory to help?
If you would like more information or need any assistance regarding the above, please do not hesitate to contact us on (07) 5504 5700 to speak to one of our trusted advisors today.
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If you're curious about what else is exempt from tax and need help with tax deductions, contact Cordner Advisory Broadbeach, Gold Coast here.
