With the FBT year coming to an end, this question pop ups a lot – what is FBT exemption for electric cars and how does it work?

Essentially, from 1 July 2022 employers aren’t liable for FBT on eligible electric cars and associated car expenses.

What are the basis rules for making your electric car FBT exempt?

Car is a zero or low emissions vehicle

This covers

• battery electric vehicle
• hydrogen fuel cell electric vehicle, or
• plug-in hybrid electric vehicle (until 1 April 2025).

It is a car designed to carry a load of less than 1 tonne and fewer than 9 passengers (including the driver). – This means not motorbikes or scooters

The electric car must be used for the first time on or after 1 July 2022

This means that exemption doesn’t apply if you have already had and used the car before this date.

Car is used by an employee or associate (such as their family member)

Luxury car tax has never been payable on the importation or the sale of the car.

To be eligible for the exemption, the value of the electric car must be below the LCT threshold for fuel efficient vehicles at the time it is first sold in a retail sale, and in any subsequent sale.

If you purchase an electric car second hand, you need to determine if it was subject to LCT at any time in the past.

What expenses are then FBT exempt?

Any expenses related to the exempt electric car are also exempt. These normally include the following:

• registration
• insurance
• repairs or maintenance
• fuel (including electricity to charge and run electric cars).

Home charging station is not a car expense, and therefore is not exempt.

Do you still need to report FBT on your employees income statements?

Although the private use of an eligible electric car is exempt from FBT, you include the value of the benefit when working out whether an employee has a reportable fringe benefits amount (RFBA).

If this 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.

Get in touch for us to prepare the calculations and FBT returns for you – accountant@xperion.com.au.