2024 Feb 16 By era 0 comment

Certain eligible electric cars will not attract Fringe Benefits Tax from 1st July 2022.

This means no FBT will be payable by employers who provide an electric car for private use so long as all the following conditions are met:

  1. The car is a zero or low emissions vehicle.
  2. The first time the car is both held and used is on or after 1st July 2022.
  3. The car is used by a current employee, or their associates e.g. family.
  4. Luxury Car Tax has never been payable on the importation or sale of the car.

However, the government will complete a review into this FBT exemption by mid-2027.

Note, a zero or low emissions vehicle is a car that has been designed to carry less than 1 tone and fewer than 9 occupants. Hence, motorbikes and scooters are not cars for FBT purposes.

Additionally, a zero or low emissions vehicle is a:

  1. Battery electric vehicle.
  2. Hydrogen fuel cell electric vehicle, OR
  3. Plug-in hybrid electric vehicle up to 31st March 2025. Such a vehicle’s exemption will extend beyond this date if purchased beforehand, but a vehicle purchased after will not be exempt.

Another important point, is that if the employer purchased a second-hand electric vehicle where the original purchase price exceeded the Luxury Car Tax threshold for fuel efficient vehicles (hence paying LCT), then the FBT exemption will not apply.

The LCT threshold for fuel efficient vehicles is:

2022-23 $84,916

2023-24 $89,332

Still, even if the electric vehicle is exempt from FBT, it will still be a Reportable Fringe Benefit for the employee if the taxable value is more than $2,000 in an FBT year.

For more information on the FBT exemption for electric vehicles, contact Era Tax and talk to our friendly team.

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