Thinking about making a new business vehicle purchase?
If so, you should read about the electric car FBT exemption.
Electric cars under $89,332, and their associated car expenses, are currently exempt from fringe benefits tax (FBT). Businesses are not required to pay FBT on the provision of electric vehicles for employees for work-related-purposes.
To qualify for the FBT exemption, the vehicle needs to meet the following criteria:
- The vehicle must be a zero or low emissions vehicle.
- The first time the car is both held and used must be on or after 1 July 2022.
- The car must be used by a current employee or their associates (such as family members).
- Luxury Car Tax (LCT) must never have been payable on the importation or sale of the car.
The government will complete a review into this exemption by mid-2027 to consider electric car take-up. We will provide an update when this review begins.
Plug-in hybrid electric vehicles
From 1 April 2025, a plug-in hybrid electric vehicle (PHEV) will no longer be considered a zero or low emissions vehicle under FBT law.
PHEV’s have surged in popularity over the last few years. They are vehicles that have both electric and petrol engines, running, and charging from both an external power source and using petrol.
If you're considering a PHEV, here are some popular models available in Australia:
- Mitsubishi Outlander PHEV
- Hyundai Tucson PHEV
- Volvo XC40 Recharge
Potential extension of the FBT Exemption
Given the growing popularity of EVs and the current government’s environmental targets, there has been speculation about the possibility of extending the FBT exemption for PHEVs beyond April, 2025. While no official decisions have been made, it is worth keeping an eye on our newsletter for any updates.
The tax advantages of owning a plug-in electric vehicle in Australia make it a compelling option for both individuals and businesses. However, it's important to be aware of the upcoming expiration of the FBT exemption. If you're considering an EV purchase, now may be the time to take advantage of these incentives.
For more information or to discuss your specific needs contact our office.
Find out more about recent FBT articles:
The Fringe Benefit Tax traps
FBT free electric cars
