The ATO has released a factsheet to assist employers determine their FBT obligations where employees are provided with an electric vehicle and associated items for their private use.
Key points identified by the ATO in its factsheet include the following:
An FBT exemption may apply to a car benefit arising if either:
– the employer allows their current employees, or their associates, to use a zero or low emissions vehicle (‘electric vehicle’) for their private use; or
– the electric vehicle is considered available for the employer’s current employees', or their associates', private use under FBT law.
From 1 April 2025, private use of a plug-in hybrid electric vehicle is no longer eligible for the exemption, unless both of the following apply:
– use of the plug-in hybrid electric vehicle was exempt before 1 April 2025; and
– the employer has a financially-binding commitment to continue providing private use of that vehicle on and after 1 April 2025.
If an employer or lessor provides an employee with the use of a car by means of a lease arrangement, the benefit provided is only a car benefit if the car lease arrangement is a bona fide car leasing arrangement.
- Associated benefits arising from the provision of certain car expenses provided with the electric vehicle are also exempt from FBT. These are not included when working out if an employee has a reportable fringe benefits amount.
- Providing an employee with a home charging station is a fringe benefit – the benefit is not an exempt associated benefit.
- If the use of the car and the associated car expenses are provided under a salary sacrifice arrangement, the exemption can still apply.
- Even if an exemption applies for the electric vehicle car benefit, the taxable value of the car benefit provided still needs to be worked out.
This is because the car benefit's value is used in working out if the employee has a reportable fringe benefits amount. This does not include the value of any associated car expense benefits.
- An employee's reportable fringe benefits amount is reported on their income statement or payment summary. Employees do not pay income tax on this amount, but it does impact their income tests and thresholds for family assistance, child support assessments and some other government benefits and obligations.
The Government will complete a review of this exemption by mid-2027 to consider electric vehicle take-up.
The factsheet also provides guidance on what employers need to do when they have provided an employee with the private use of an electric vehicle, provides further details on satisfying the requirements of the exemption and discusses when expenses will be exempt from FBT by virtue of being ‘car expense benefits’.
The factsheet also clarifies that the ATO will accept the value of exempt electric car benefits will not be included in the exemption caps that apply for certain non-profit employers (i.e., the $17,000 or $30,000 exemption cap) and rebatable employers (i.e., the $30,000 rebate cap).
For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au