As an employer, you previously needed to pay fringe benefits tax (FBT) on electric cars provided to your employees. Since 1 July 2022, you no longer need to pay FBT on benefits provided for eligible electric cars and associated expenses.
Getting the green light
You will now be exempt from paying FBT on benefits provided for electric cars that meet all the following criteria:
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the car is a zero- or low-emissions vehicle
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the first time the car is both held and used is on or after 1 July 2022
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the car is used by a current employee or their associates (such as family members)
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luxury car tax has never been payable on the importation or sale of the car.
Registration, insurance, repairs, maintenance and fuel expenses provided for eligible electric cars are also exempt from FBT.
Pump the brakes; it’s a red light
While you may not have to pay FBT on eligible electric cars, there are exclusions including motorcycles and scooters, whether they’re electric or not. Home charging stations are also not exempt (instead there may be a property fringe benefit or an expense payment fringe benefit for these).
It’s reporting time
Despite the exemption, you’ll still need to determine the taxable value of the benefit when working out whether an employee has a reportable fringe benefits amount (RFBA).
If the total taxable value of reportable fringe benefits provided to an employee during the FBT year is more than $2,000, you must report the RFBA through Single Touch Payroll or on the employee’s payment summary.
Your employees can read more about the consequences of having a reportable fringe benefits amount.
Full speed ahead
To help fill the potholes in your electric vehicle knowledge, check out our fact sheet for more information.
If you’ve provided a car that isn’t an electric vehicle to an employee for their private use, FBT applies. FBT can apply to cars, other motor vehicles, car leasing, car parking and road tolls.
Remember, registered tax agents and BAS agents can help you with your tax. Contact us if you have any questions regarding any of the above. Call us on (08) 9200 4215.
Source: ato.gov.au March 2023
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/Business/Small-business-newsroom/Employers/Sparks-are-flying-this-coming-FBT-year/?SmallBusNewsroomLanding.
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