by Georgia King
The Federal Government has recently introduced Fringe Benefits Tax (FBT) concessions relating to electric vehicles (EVs) that can result in substantial after-tax savings for businesses and employees.
There may be no better time to cash in on your green credentials, not only helping the environment, but also your bottom line.
We’ve run some numbers and compared the FBT implications of an EV against a traditional fuel powered vehicle, and on an $80,000 vehicle the after-tax savings could be as high as $16,000 per year.
What Vehicles Are Eligible?
As with most tax incentives, you need to be careful that you meet the eligibility requirements, which include:
- The vehicle is a zero or low emissions vehicle.
- It was held and used on or after 1 July 2022.
- An employee of a business uses the car.
- The car’s purchase price is below the Luxury Car Tax (LCT) threshold ($89,332 in the 2024 financial year).
It’s important to note here that not all electric vehicles are deemed a zero or low emissions vehicle under the Australian Taxation Office (ATO) definition. The car needs to be either a battery EV, hydrogen fuel cell EV, or a plug-in hybrid vehicle.
It’s also important to note that despite the FBT concession, a Reportable Fringe Benefit is still included for the purposes of your Individual Tax Return. This is used to determine adjusted taxable income for a range of areas such as the Medicare Levy Surcharge, Private Health Insurance Rebate, and certain Centrelink payments.
How We Can Help
If you are interested in upgrading your vehicle to an EV, we can assist you in ensuring that you meet the eligibility requirements, and calculate and explain the potential tax savings for you. As outlined above, this is of benefit to businesses and their employees, but like most tax matters, it’s important that you read the fine print and get a full understanding of the concessions to make sure you meet all the requirements.
To discuss your options with us, please get in touch below or call us on (02) 4969 6600.