We are getting a lot of questions regarding the scope of the FBT exemption for electric vehicles (EVs).
In addition to the obvious issues as to which types of EVs are eligible and how to treat charging costs a lot of questions relate to the transitional rules including whether and when a second hand imported vehicle may qualify.
An interesting question recently received involved imported second hand EV’s (of a type that would other be eligible for the exemption).
For example, an employer directly imports the vehicle or purchases from a 3rd party who imported the vehicle what is the transitional requirement regarding when/who first held and used the vehicle.
The legislation the introduced the new section 8A exemption included the following transitional rule:
“7 Application of amendments
(1) The amendments of the Fringe Benefits Tax Assessment Act 1986 made by this Schedule apply to benefits provided on or after 1 July 2022.
(2) Section 8A of the Fringe Benefits Tax Assessment Act 1986 applies to a car benefit only if the earliest time when a person both held and used the car was at or after the start of 1 July 2022″.
The transitional rule makes it clear that section 8A will only provide exemption if the earliest time when a person both held and used the car was at or after the start of 1 July 2022.
The use of the words “a person” in the transitional rule mean the exemption is not tested in regard to when the person providing the potentially exempt benefit both first held and used the car. Exemption is instead tested by ascertaining when any person both first held and used the car.
Accordingly, a vehicle that has been held and used overseas prior to 1 July 2022 would not be eligible for the exemption regardless of when the vehicle is imported (for example only if on or after 1 July 2022).
The general rules regarding the scope of the exemption can be view on the ATO web site – click here.
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