The FBT exemption for electric vehicles – fully switched on

For quite a while now we have been following the Government’s 2021/22 Budget announcement to provide an FBT exemption for certain electric vehicles.

On 12 December 2022 legislation implementing the Government’s proposal to provide an FBT exemption received Royal Assent.

The intended scope of the FBT exemption has been well canvassed in our earlier articles.

To ensure passage of the legislation, the proposed exemption as it relates to  plug-in hybrid electric vehicles will now end on 1 April 2025 subject to transitional relief where an exempt car benefit was provided prior to 1 April 2025 and, before 1 April 2025, it was also committed to be provided on or after 1 April 2025.

For the purposes of the proposed exemption a ‘plug-in hybrid electric vehicle’ is a motor vehicle that:

a) uses an electric motor for propulsion; and

b) takes and stores energy from an external source of electricity; and

c) is fitted with an internal combustion engine for either or both of the following:

(i) the generation of electrical energy;

(ii) propulsion of the vehicle.

The ATO will release further guidance on when a benefit is committed to be provided however it is expected it will include situations where a financially binding commitment to provide the benefit exists (for example a novated lease). The ATO commentary can also be expected to deal when a commitment ceases and when FBT becomes payable.

Many issues arise as a result of the exemption including:

• how do the transitional rules apply;
• how are at home (and other) electricity charging costs dealt with under the operating costs method;
• how are the capital costs of installing home charging stations dealt with; and
• despite being FBT exempt, an electric vehicle may still give rise to a Reportable Fringe Benefit.

The ATO has promised further guidance in March 2023 and we will be covering this issue in detail in our  2023 FBT Roadshow.

We will be covering this topics and many others at the 2023 FBT Roadshow. Come join us and find out all you need to know about FBT obligations and be prepared in 2023!

Join us for the 2023 FBT Roadshow, covering key issues for Governments and NFPs | Brisbane, Darwin, Melbourne & Online | 14 – 23 March 2023 | Click here for more information and to register >

If you would like to become a member, please contact us at admin@taxed.com.au.

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