Are you looking to get the most out of your business vehicle? Purchasing an electric car could help your business be environmentally conscious as well as tax effective, thanks to the new proposal to make electric cars exempt from FBT.
The new ‘Treasury Laws Amendment (Electric Car Discount) Bill 2022’ allows zero or low emission vehicles to be free from Fringe Benefits Tax when a business provides them to an employee as a car fringe benefit.
The Government is hoping that this measure will help fuel demand for electric vehicles, although only businesses can access the benefits of the FBT exemption.
- The exemption does not apply to cars with a value above the luxury car tax threshold for fuel efficient cars.
- The exemption will to apply to benefits provided from 1 July 2022.
- The exemption can apply to cars that are provided under a salary sacrifice arrangement.
- You will need to confirm whether the specific car model in question will qualify for the exemption. Some hybrid vehicles could potentially qualify for the exemption, while other hybrid vehicles won’t.
- While the measure provides an exemption from FBT in relation to qualifying vehicles, the value of the benefit will still be considered in determining the reportable fringe benefits amount of the employee.