FBT exemption for electric cars

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If you’re an employer who provides cars to your employees, you may be interested to know that there is now an exemption from Fringe Benefits Tax (FBT) for eligible electric cars and associated expenses.

Previously, the FBT consequences for providing electric cars to employees were essentially the same as any other car. However, this exemption came into effect on 1 July 2022, meaning that the 2023 FBT year is the first time it will be relevant.

Broadly, an electric car will be exempt from FBT where it meets the following criteria:

  • The car is a zero- or low-emissions vehicle.
  • The car is first held and used on or after 1 July 2022.
  • The car is used by a current employee or their associate(s), such as a family member.
  • Luxury car tax has never been payable on the importation or sale of the car.

Not only are the benefits provided for electric cars exempt from FBT, but so too are the registration, insurance, repairs, maintenance, and fuel expenses. However, please note that while the benefit is exempt from FBT, the taxable value of the benefit must still be determined when working out whether an employee has a reportable fringe benefits amount to be included on their income statement or payment summary.

If you have any questions or concerns about this new exemption and how it may affect your FBT obligations for the 2023 FBT year, please don’t hesitate to contact our office. We’re here to help.

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