The Treasury Laws Amendment (Electric Car Discount) Bill 2022 was introduced in the House of Representatives on 27 July 2022. The Bill provides a Fringe Benefits Tax (FBT) exemption for electric cars used for private use.
Once legislated, the exemption will apply to zero or low-emission vehicles first held and used on or after 1 July 2022.
What vehicles are eligible?
For an electric car to be eligible for the exemption, it must meet the following criteria:
- Fall within the definition of a 'car', being designed to carry less than one tonne and fewer than 9 passengers
- Cost below the luxury car threshold for fuel efficient cars ($84,916 for the 2023 financial year)
- Use one or more electric motors for propulsion
- Be fuelled by:
- Off-vehicle electrical power source - this includes plug-in hybrids;
- A battery;
- Electric generator;
- Hydrogen fuel cell; or
- A combination of the above.
- Purchased new and first held and used on or after 1 July 2022
- A second-hand electric car may be eligible provided it was purchased new on or after 1 July 2022
Who can benefit from the FBT exemption?
Employers providing a car fringe benefit to employees can stand to benefit from this Bill. The purchase of an electric car valued at $50,000, using this exemption, could save employers up to $9,000 a year.
This exemption may also reduce payroll Tax costs.
Employees can also stand to benefit from effective salary sacrifice arrangements involving FBT exempt electric vehicles. In circumstances where an employee salary sacrifices a similar $50,000 electric car, they can save up to $4,700 a year.
Should you have any queries regarding salary packaging as an employer or employee please do not hesitate to contact us.
