Aug 5, 2022 Matthew Hung

Fringe Benefits Tax Exemption: The Latest Electric Car Incentive

On the 27th July 2022 the government introduced the Treasury Laws Amendment (Electric Car Discount) Bill 2022 into parliament.

This Bill provides for an FBT exemption for cars that are classified as zero or low emission vehicles and are provided by employer to an employee as a car fringe benefit, making it one of the more consumer-friendly electric car incentives introduced in Australia.

The Government is hoping that this measure will help drive the demand for electric vehicles.

FBT Exemption: One of the Big Electric Car Incentives

• The exemption is limited to vehicles that have a value below the luxury car tax threshold for fuel efficient cars ($84,916 for 2022-2023).

• The exemption is intended to apply to benefits provided from 1 July 2022, but won’t generally be available to cars that were already owned on this date.

• The exemption can apply to cars that are provided under a salary sacrifice arrangement.

• It is important to confirm whether the specific car model in question will qualify for the exemption. The criteria includes the following, A battery electric vehicle, hydrogen fuel cell electric vehicle and plug-in hybrid electric vehicle

• While the measure provides an exemption from FBT in relation to qualifying vehicles, the value of the benefit will still be taken into account in determining the reportable fringe benefits amount of the employee.

The Bill has been referred to the Senate Economics Legislation Committee for review with a report due by the end of September 2022.

The Government will also review this discount in 3 years time to consider take-up and whether it will remain.

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