From 1 April 2025, plug-in hybrid electric vehicles (PHEVs) will no longer qualify as zero or low emissions vehicles under fringe benefits tax (FBT) law and will not be eligible for the electric cars exemption. However, if you meet the criteria below, you may still be able to apply for the electric car exemption.
Continued Exemption Conditions
You can apply for the electric car exemption if:
The use of the PHEV was exempt before 1 April 2025.
You have a legally binding commitment for private use of the vehicle on and after 1 Apri1 2025. Optional extensions do not count as binding.
Loss of Exemption
The FBT exemption will end if any changes occur to a pre-existing commitment on or after 1 April 2025, including:
Optional Extensions: Agreements must be for a fixed duration.
- Breaks in Novation: If the vehicle is unavailable for private use.
- Financial Changes: Alterations to lease payments or residual values.
- Change of Employer: This creates a new commitment.
Examples
Optional Extensions:
If Simon leases a PHEV for three years with an option to extend for two more years, his FBT exemption lasts until 31 March 2027. The extension is not binding, so the exemption stops then.
Break in Novation:
Tony has a four-year novated lease but takes unpaid leave for three months. During this time, no car benefit is provided. The break alters the initial commitment, ending the FBT exemption from 1 May 2025.
If Tony prepays his lease and the novation continues, the FBT exemption remains valid.
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.