No FBT on Zero or Low Emission Vehicles

12 December 2022

The Treasury Laws Amendment (Electric Car Discount) Act 2022 received Royal Assent today, eliminating FBT from a range of zero or low emission vehicles.

The exemption will cover zero and low emissions cars, with a value below the Luxury Car Tax (LCT) threshold for fuel efficient vehicles ($84,916), being:

  • Battery electric vehicles
  • Hydrogen fuel cell electric vehicles
  • Plug in hybrid electric vehicles.

Plug-in hybrid electric vehicles will only be FBT exempt up to 1 April 2025 (but pre-existing arrangements at that time can continue as exempt until the end of the arrangement).

Salary packaged cars qualify in the same way as other employer provided cars.

The exemption applies retrospectively from 1 July 2022. Second-hand cars can qualify if their first retail sale is on or after 1 July 2022.

Although the private use of an eligible electric car is exempt from FBT, you must include the value of the benefit when working out whether an employee has a reportable fringe benefits amount.  Schools will need to work out the notional taxable value of the benefits associated with the private use of the exempt electric car

For more information see the ATO website here.

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