The Federal Government is encouraging the take up of electronic vehicles (EV). As part of this plan, the Federal Government recently passed legislation to exempt Fringe Benefit Tax (FBT) on an EV.
FBT exemptions on EV
Broadly, a business that acquires a company EV (which is being used for private purposes/parked at private residences of an employee) will not be subject to FBT, if the vehicle meets all of the following conditions:
FBT exemptions on EV
Broadly, a business that acquires a company EV (which is being used for private purposes/parked at private residences of an employee) will not be subject to FBT, if the vehicle meets all of the following conditions:
- the car is a zero or low emissions vehicle
- the car is held and used on or after 1 July 2022
- the car is used by a current employee or their associates (such as family members)
- below the luxury car tax threshold (currently $84,916)
Other concessions (temporary full expensing)
Further, a business may choose to claim a full tax deduction for the electric cars up to $64,741 for the 2022-23 year under the “temporary full expensing provisions.” At this stage, the temporary full expensing provisions ends 30 June 2023.
Further, a business may choose to claim a full tax deduction for the electric cars up to $64,741 for the 2022-23 year under the “temporary full expensing provisions.” At this stage, the temporary full expensing provisions ends 30 June 2023.
According to the Federal Government announcement,
- if a model valued at about $50,000 is provided by an employer through this arrangement, the estimated FBT exemption would save the employer up to $9,000 a year per car.
- for individual/employees using a salary sacrifice arrangement to pay for the same model, their saving would be up to $4,700 a year. A salary sacrifice arrangement involves the individual employee reducing their gross income to pay for the car, which therefore effectively reduces their personal tax bill.
If you have a business that pays employees (including yourself). The above concessions will apply to you.
If you have any questions, please do not hesitate to contact our office.
Call: 0755804455
E-mail: info@maxaccountants.com.au
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