Electric Vehicle Exemption receives Royal Assent.

Written By Debbie Grace

Last month, we notified you of an introduction of the Treasury Laws Amendments (Electric Car Discount) Bill into Parliament.  Since the Government announced the introduction of the Bill in July we have all been eagerly awaiting royal assent for the Bill to become law.  We are pleased to announce that royal assent was given on 12 December 2022 which means an FBT exemption is now available for eligible electric vehicles that are both first held and used on or after 1 July 2022.

WHAT DOES THIS MEAN?

  • From 1 July 2022 employers do no pay FBT on eligible electric cars & associate car expenses

  • Benefits provided under salary packaging arrangements are included in the exemption

WHAT ARE THE CONSIDERATIONS?

  • Is it tax effective

  • What are the benefits

  • Cost of purchasing an EV vs traditional vehicle

  • The exempt benefit may be included as a Reportable Fringe benefit and have implications for:

    • Medicare levy surcharge

    • Income test for family assistance

    • child support assessments; and

    • some other government benefits & obligations

WHAT CARS ARE IN?

  • Zero or low emission car designed to carry less than 9 passengers and carry a load of less than 1 tonne.

    • battery electric vehicle

    • Hydrogen fuel cell electric vehicle; or

    • Plug-in hybrid electric vehicle

  • First time held (by the original owner) is after 1 July 2022

  • Any electric vehicle that has never has never had luxury car tax (LCT) paid

    • If purchased new can see on contract

    • If second hand need to review original purchase price when new and if LCT would have been paid

    • Current threshold is $84,916 for fuel efficient vehicles

Plug-In Hybrid electric vehicles – 1 July 2025 onwards

From 1 July 2025, a plug in hybrid vehicle will cease to be exempt vehicles.

However, you can continue to apply the exemption if both of the following apply:

  • Use of the plug-in hybrid electric vehicle was exempt before 1 April 2025; and

  • You have a financially binding commitment to continue to provide private use of the vehicle on or after 1 April 2025. Note, any optional extension of the agreement is not considered binding.

If you require further information in relation to eligible electric vehicles, tax exemptions etc, please get in touch with us.

Debbie Grace
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