Understanding the Electric Vehicle Home Charging Rate
In the ever-evolving landscape of electric vehicles (EVs), one key aspect for both employers and individuals is understanding how to calculate the cost of charging these vehicles at home. We have previously sent out a blog outlining the draft Practical Compliance Guideline (PCG) 2023/D1 released by the ATO – click here to refresh your memory. The ATO have since confirmed and formalised Practical Compliance Guideline PCG 2023/2.
Key Points
1. Flexibility in Calculation Methodology
Employers and individuals have the freedom to choose whether to adopt the methodology outlined in the guideline or to calculate the actual cost of electricity. This choice can be made on a per-vehicle basis and is applicable for the entire income or Fringe Benefits Tax (FBT) year. Importantly, this choice is not fixed and can be revisited annually.
2. EV Home Charging Rate
For the FBT years or income years commencing on or after 1 April 2022, the prescribed EV home charging rate stands at 4.2 cents per kilometre. This rate is multiplied by the total relevant kilometres travelled by the electric vehicle within the respective period.
3. Commercial Charging Stations
Should charging occur at commercial stations, a decision needs to be made regarding whether to utilise the EV home charging rate or the cost incurred at the commercial station. It's noteworthy that these options are mutually exclusive, meaning if the commercial charging station cost is used, the EV home charging methodology cannot be applied. Thorough record-keeping, including the retention of receipts, is essential to substantiate any claims made.
4. Record-Keeping Requirements
Taxpayers opting to rely on the EV home charging rate must maintain records of the distance travelled by the vehicle, typically through odometer records, within the relevant FBT or income year. Furthermore, employers and individuals applying this guideline for tax purposes must ensure compliance with record-keeping standards, which include maintaining a valid logbook for the operating cost method.
5. Exclusions
It's important to note that the guideline specifically excludes plug-in hybrid vehicles, electric motorcycles, or electric scooters.
Implementation Dates
The guideline came into effect for FBT purposes from 1 April 2022 and for income tax purposes from 1 July 2022 onwards.
In conclusion, PCG 2024/2 provides a structured approach to calculating home charging costs for EVs, offering flexibility while maintaining compliance standards. As the adoption of electric vehicles continues to grow, understanding and adhering to such guidelines become increasingly pertinent for both employers and individuals alike.
If you have any questions in relation to your EV electricity usage, how to calculate and what records to keep, please get in touch with us at the office.