The Benefits of Electric Vehicles for Business

Fringe Benefits Tax

Fringe Benefits Tax (FBT) is a tax paid by employers on non-cash benefits provided to their employees (or to their employees’ family members). The provision of a work vehicle for private use is one of the most common fringe benefits that employees provide. If a work vehicle is provided to the employee for private use, there is generally a requirement for either:

The employer to pay FBT of 47% on the grossed up value of the benefit; or
The employee to make a contribution back to the employer equal to the taxable value of the benefit they’ve received

Unless the fringe benefit is specifically exempt from FBT. This exemption can apply to items such as mobile phones, tablets and other electric devices, certain vehicles such as work utes, and now also to some electric vehicles.

An eligible electric vehicle is a vehicle that meets all the following conditions:

The car is a zero or low emissions vehicle,
The first time the car is both held and used is on or after 1 July 2022,
The car is used by a current employee or their associates (such as family members), and
Luxury Car Tax has never been payable on the importation or sale of the car.

The act defines a zero or low emissions vehicle as:

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

You can find out more about the FBT savings on electric cars here.

Luxury Car Tax

Luxury Car Tax (LCT) is a compulsory levy that raises the price of many newly purchased cars in Australia where the GST-inclusive price of the vehicle is above $89,332 for fuel efficient vehicles or $76,950 for other vehicles in the 2024 financial year. Cars with a LCT value over the threshold attract an LCT rate of 33%.

A fuel-efficient car is defined by the ATO as a car that has fuel consumption that does not exceed 7 litres per 100 kilometres as a combined rating under the vehicles standards in force under section 7 of the Motor Vehicles Standards Act 1989.

Stamp Duty

Sadly, on 16 September 2023, the NSW Government announced that the electric vehicle stamp duty exemption would cease on 31 December 2023. Purchasers who placed a deposit on or purchased an eligible electric vehicle up to 31 December 2023, and are still awaiting delivery of the vehicle, will still be eligible for a stamp duty refund. Applications for a stamp duty refund must be made on or before 30 June 2024.

Are you looking to take advantage of these exemptions in your business? Take this opportunity to talk with us about this and other tax advice for your business. Our team at BLG Business Advisers service businesses all over Australia and are here to help you.

We wish you and your business every success!