The biggest change to FBT within the 2023 FBT year is the introduction of the electric car exemption.
The Treasury Laws Amendment (Electric Car Discount) Act 2022 received royal assent on 12 December 2022 which meant EVs provided to employees for private use are now exempt from FBT.
Even though the legislation had gone through, EVs must still meet a strict criteria to be eligible for the ATO’s FBT exemption.
The criteria included that the EV must have been first held and used after 1 July 2022 and satisfy zero or low emissions vehicle conditions by being a battery electric vehicle, a hydrogen fuel cell electric vehicle, or a plug-in hybrid electric vehicle.
The selected vehicle must also be used by a current employee or their associates and it cannot be used by past or future employees.
The EV must also never have had luxury car tax paid on the supply or importation of it. For the 2022-23 financial year, the luxury car tax threshold for fuel-efficient vehicles was $84,916 meaning any new EVs purchased must be cheaper than this amount.
If the EV was a secondhand vehicle then the onus was on the employer to research prior sales to determine whether the luxury car tax was ever applicable to it.
The ATO also clarified that home charging stations would not be an exempt expense, with employers who were planning to provide an employee with one at their home the fringe benefit must be handled separately, even if packaged in the leasing arrangement.
However, charging stations provided on the business premise would be FBT exempt along with the electricity provided to charge the vehicle there.
Please note that although the private use of an eligible electric car is exempt from FBT, you need to include the value of the benefit when working out whether an employee has a reportable fringe benefits amount (RFBA).
You will need to work out the notional taxable value of the benefits associated with the private use of the exempt electric car.
An employee has an RFBA if the total taxable value of certain fringe benefits provided to them (or their associate) is more than $2,000 in an FBT year. The RFBA must be reported through Single Touch Payroll or on the employee’s payment summary.
If you would like any further information about FBT or the electric car exemption please call our office on 9387 5637.
Source: Accountants Daily
