Electric Vehicle FBT Exempt

Posted 22 Feb '23

Electric vehicle FBT exemption legislation is now law

The Australian Treasury Laws Amendment (Electric Car Discount) legislation was passed in 2021 and came into effect on July 1, 2022. As a result, electric vehicles provided as a car benefit by employers to their employees can be exempt from Fringe Benefits Tax (FBT) if certain conditions are met.

Under the new legislation, eligible employers can provide electric vehicles to their employees as a car benefit without incurring FBT, provided that the vehicles meet the eligibility criteria (below). This can provide a significant cost savings for both employers and employees, as electric vehicles are typically more expensive than their petrol or diesel counterparts.

The aim of the legislation is to encourage the uptake of electric vehicles in Australia and support the transition towards a low-emissions transport sector. By providing a tax incentive for electric vehicle adoption, the government hopes to encourage more Australians to consider purchasing electric vehicles and reduce the country's greenhouse gas emissions.

The eligibility criteria for the FBT exemption for electric vehicles, as outlined in the Australian Treasury Laws Amendment (Electric Car Discount) legislation, are:

  1. The electric vehicle must have been first registered on or after July 1, 2022.
  2. The electric vehicle must have a zero-emission range of at least 150 kilometers.
  3. The electric vehicle must not be a plug-in hybrid electric vehicle (PHEV) or hybrid electric vehicle (HEV).
  4. The electric vehicle must not be recharged using an internal combustion engine or a non-electric motor.
  5. The electric vehicle must be used primarily for business purposes.

The exemption applies to the car's taxable value, which is calculated based on the vehicle's purchase price and any associated costs such as registration and stamp duty. It does not cover any additional costs related to the vehicle's operation and maintenance.

To review the Treasury Laws Amendment (Electric Car Discount) Bill 2022, visit the Australian Government website.

At Trinity Advisory, we specialise in tax accounting, advisory services, and business coaching for small businesses located in and around Cairns (116 Mulgrave Road, Parramatta Park QLD 4870) and the Sunshine Coast (2/8 Maroochydore Road, Maroochydore QLD 4558).

Should you need any taxation or accounting advice for your business, get in touch with Trinity Advisory today. Our team of expert Business Accountants, Advisors and Coaches are here to help!

Ref: Treasury Laws Amendment (Electronic Car Discount) Bill 2022


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