The ATO has released more detailed public guidance on the new electric vehicle FBT exemption and finalisation of TR 2021/21 which hopefully settles the last of the issues relating to the car parking fringe benefits rules (for now at least). Both though are live matters for 2022/23 FBT compliance and employers need to be across the ATO announcements.
Electric vehicle exemption – update ATO Fact Sheet
We have previously covered the new FBT exemption for electric vehicles in January, but feel it is worth highlighting a few significant comments in the ATO’s recently issued Fact Sheet dealing with the topic. In this article we will focus on matters of note in the Fact Sheet that expand on previously issued ATO content:
- the Fact Sheet notes in several instances that whilst the electric vehicle exemption can apply to a vehicle provided under a leasing arrangement the lease must be a bona-fide lease. We are note sure what concerns the ATO may have regarding people seeking to access the exemption through leases that are not bona-fide, but feel there must be some concerns that warrant the repeated mentions. The ATO specifically mention issues with leases where the cost of a charging station is ‘bundled’ into a lease (see further below);
- the Fact Sheet reminds employers that where they seek to use the exemption on a 2nd hand vehicle they must secure reasonable evidence that supports the fact that the vehicle was first held and used on after 1 July 2022 and that no luxury car tax was applicable at the first retail sale. An example is provided of the employer using the vehicle identification number to determine when a vehicle was manufactured and research to establish the recommended retail price at that time;
- the Fact Sheet confirms where a State or Territory imposes a road user charge on an electric vehicle based on kilometres travelled and that charge is collected as part of the registration process the charge forms part of the car expenses (along with registration costs);
- in relation to replacement batteries for electric vehicles, the Fact Sheets indicates that where a battery is a modern day equivalent of the previous battery (similar power , energy storage and lifecycle), the battery cost will form part of the car expenses (repairs and maintenance). Interestingly though, the Fact Sheet indicates where a replacement battery is a capital expense it will form part of the cost price of the car (at that time) and impact the taxable value. This will impact electric vehicles that are not eligible for the exemption and values used for determining Reportable Fringe Benefit amounts;
- providing or reimbursing an employee with/for an electric charging station is a separate benefit and does not form part of the car expenses; and
- examples are given as to the treatment of business and non-business accessories including an example of how a charging cable may be treated – for now all we can say on this is “…things are never simple in the FBT world”.
We expect many more ‘updates’ to the ATO views regarding the electric vehicle exemption and related matters. We will monitor and advise as they are announced.
Car parking fringe benefits rules
TR 2021/2 has now been finalised following changes made to deal with the implications of the Virgin Airlines case (see our December 2021 article here), and the question of what is an employees primary place of employment on a day where the employee works at multiple employer workplaces. Readers who feel this may be an issue for their business should have a read of paragraph 15A to 15H of the updated ruling.
This now only leaves Chapter 16 of the the ATO’s ‘ Fringe benefits tax – a guide for employers’ to be finalised (the revised version there-of is still in draft form). Once this occurs the FBT and car parking position should hopefully be settled for a while.
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