Electric cars now FBT exempt – what you need to know
We are excited to share that the Government’s Electric Car Discount Bill has now been legislated and is in effect from 1 January, 2023.
The new legislation makes Electric Vehicles (EV) and Plug-in Hybrid Vehicles (PHEV) exempt from Fringe Benefits Tax (FBT).
Employees can now salary package an eligible EV or PHEV on our Lendly Pay platform and pay 100% of the car costs from their pre-tax salary with no FBT payable by the employer. Employees can save as much as $12,000 annually in tax benefits, doubling the already large tax savings available through novated leasing.
Here’s a quick summary of the new legislation:
- The FBT exemption on EV and Hydrogen cars will run for a minimum of 3 years, from 1 July 2022 to 30 June 2025 and will be reviewed at that time;
- The exemption will apply to novated leases as well as company-owned and leased vehicles;
- The car must be a zero or low-emissions vehicle; EV, PHEV or Hydrogen;
- The car has to have been first purchased on or after 1 July 2022; and
- When the car was first purchased, it must have been below the fuel-efficient luxury car tax threshold, which is currently $84,916 for FY22-23.
The legislation includes a sunset clause on PHEVs so that they will be exempt from FBT until 31 March 2025. This is a solid indication that we can expect the exemption for electric vehicles to continue past the initial review period of June 2025.
This is an excellent outcome for employers, employees and the environment and a massive step in the right direction to bring zero-emission vehicles into every Australian home.