Navigating Taxation of Electric Vehicles

As electric vehicles (EVs) gain momentum in Australia it is essential for employers and individuals to understand the Fringe Benefits Tax (FBT) rules associated with these vehicles. Let’s delve into the exemption criteria, managing home charging expenses, record-keeping and reporting to ensure compliance and maximise benefits.

FBT Exemption Criteria

The Electric Car full Exemption from FBT, effective from 1 July 2022, offers incentives for businesses adopting EVs, bringing long-term cost savings and environmental advantages. To qualify, the vehicle must meet specific criteria:

It must be a car powered solely by electricity, hydrogen fuel cells, or plug-in hybrid technology (excluding motorcycles and scooters)
The vehicle is used by a current employee or their family
The vehicle's cost should fall below the luxury car tax threshold of $89,332 (2023-24 Year)

Managing Home Charging Expenses

While car expenses for EVs are generally exempt from FBT, providing home charging stations to employees may trigger FBT obligations. Reportable Fringe Benefit Amounts (RFBA) must be calculated and reported for employees via Single Touch Payroll.

Record-Keeping

Detailed record-keeping is vital. Employers and individuals must maintain records of vehicle usage and charging expenses, including odometer records, logbooks and electricity bills.

Reporting Obligations

Even with the FBT exemption, reporting obligations persist. Employers must include the grossed-up taxable value of any exempt EV car benefits as the employees' RFBA to ensure accurate tax reporting.

Compliance Checklist

Here is a practical checklist to streamline compliance:

31 March each year

review status of exempt vehicles
odometer reading
logbooks
consider all fringe benefits and prepare FBT return if required

30 June each year

accurate reporting of RFBA via STP on employee income statements
summarise electricity receipts (EV charging)
provide vehicle and charging information to accountant

Navigating FBT for EVs demands an understanding of exemption rules, home charging expenses, record-keeping and reporting. As the EV landscape evolves, staying abreast of regulatory updates will be essential in maximising the potential of electric vehicles while minimising tax liabilities.