Electric cars to be FBT Exempt under new EV Discount Bill
The government supercharges tax benefits on Electric Vehicles.
We’re excited to see the introduction of the Electric Car Discount Bill into Parliament. The draft legislation is aimed at helping increase the adoption of electric vehicles by making them more affordable for Australians.
This is achieved by making Electric Vehicles (EV) and Plug-in Hybrid Vehicles (PHEV) exempt from Fringe Benefits Tax (FBT).
Currently, when an electric vehicle owned by the company or by the employee via a novated lease is used for personal use, the company becomes liable for FBT. For novated leases on our Lendly Pay platform, the employees make post-tax contributions towards the car to eliminate this FBT liability.
This legislation would mean that if an employee purchases an EV or PHEV via a novated lease on Lendly Pay (and it’s under the luxury car tax limit), then the employee will get to pay for the entire car costs from their pre-tax salary with no FBT payable.
Here’s a quick example of just how big these additional savings are;
An employee purchases a $51,000 BYD Atto 3 (EV) on Lendly Pay; without the FBT exemption, they would still be saving $4,187 per year in tax, and the monthly after-tax cost of the car would be $1,303.
That exact same car but now utilising the proposed FBT exemption, would have an annual tax savings of $8,021 and the after-tax cost to the employee would only be $983 per month. The exemption doubled the tax benefit and reduced the after-tax cost of the car by 25%.
Here’s a quick summary of the Electric Car Discount Bill;
- The FBT exemption 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/or leased vehicles;
- The car must be a zero or low emissions vehicle; EV, PHEV or Hydrogen;
- The car has to have been purchased on or after the 1st of July 2022;
- When the car was first purchased, it must be below the fuel-efficient luxury car tax threshold which is currently $84,916 for FY22-23
This is a great outcome for employers, employees and the environment and a huge step in the right direction to make zero-emission vehicles accessible to more Australians.
If you want to find out how you can be ready to give your team access to these incredible tax savings via our Lendly Pay platform contact us here.