Before parliament is a bill for exempting electric cars from FBT
This Bill provides for an FBT exemption for cars that are classified as zero or low emission vehicles and are provided by employer to an employee as a car fringe benefit. The Government is hoping that this measure will help fuel demand for electric vehicles, although the fact that the concession is provided in the form of an FBT exemption limits the scope of the concession to
Some key points to note in relation to this measure include:
- The exemption is limited to vehicles that have a value below the luxury car tax threshold for fuel efficient cars.
- The exemption is intended to apply to benefits provided from 1 July 2022, but won’t generally be available to cars that were already owned on this date.
- The exemption can apply to cars that are provided under a salary sacrifice arrangement.
- It is important to confirm whether the specific car model in question will qualify for the exemption. For example, certain hybrid vehicles could potentially qualify for the exemption, while other hybrid vehicles won’t.
- While the measure provides an exemption from FBT in relation to qualifying vehicles, the value of the benefit will still be taken into account in determining the reportable fringe benefits amount of the employee.
To qualify, the low-emissions vehicle must have a first retail price below the current relevant luxury car tax threshold of $84,916 (for 2022‑23), and have been first made available for use on or after July 1 of this year – meaning the legislation will be backdated. The Labor Government claims an employer offering a circa $50,000 EV to an employee as a fringe benefit could save up to $9000 a year.