Home charging expenses for plug-in hybrid vehicles

The ATO has released a draft guidance as an update on calculating home charging expenses to include plug-in hybrid vehicles (PHEV).

The ATO has released draft guideline (PCG 2024/2DC) to calculate electricity costs of charging an electric vehicle or PHEV at a taxpayers residential premises home if they use either an electric vehicle or PHEV in gaining or producing their assessable income.

It sets out a method that calculates the cost of electricity when an EV or PHEV is charged at an employee’s or an individual’s home. Taxpayers may choose to apply a rate of 4.20 cents per kilometre travelled in an FBT or income year.

Guidance previously provided by the ATO in PCG 2024/2 excluded PHEVs from applying cents per kilometre rate of 4.20 cents (shortcut method) which can be used to calculate electricity costs of charging an EV at a residential premises.

Fringe benefits tax 

If an employer provides an employee or associate with an EV or PHEV that lead to the provision of car, residual or expense payment benefits, as per this draft guideline, will have the option to use the shortcut method ie a rate of 4.20 cents per kilometre travelled to calculate taxable value of such benefits

Income tax deductions

The shortcut method can also be used by an individual taxpayer to calculate work-related car expenses for income tax purposes when using the logbook method, for a motor vehicle which is not a car, a deduction may also be claimed by calculating the total kilometres travelled by the vehicle during an income year.

Methodology for calculating home charging costs for PHEVs

Step 1: calculate actual petrol costs vs electricity costs for the FBT or income year

Start by gathering the petrol receipts for the financial year. Alternatively, use the total petrol spend divided by the official average petrol price for the respective state.

Step 2: Calculate total petrol kilometres

Calculate the total petrol kilometres travelled by the PHEV during the year by converting the petrol amount into litres using the PHEV's petrol consumption rate (divide petrol costs calculated in step 1 by the petrol consumption rate.

Step 3: Calculate total annual kilometres

Subtract your petrol kilometres from your total odometer reading for the period. The difference represents the distance travelled on electric power. Multiply the electric kilometres travlled with the cents per kilometre rate of 4.20 to calculate the home charging cost for your PHEV.

Eligibility for making a claim

To be eligible to apply this method, yearly odometer readings, logbooks and at least one electricity bill must be maintained/obtained.

Adopting this methodology is optional, and a taxpayer may choose to opt-out/opt-in on a yearly basis.