Electric Vehicles

For a lot of companies in Australia, a motor vehicle is a necessity for their employees. Up until recently, only employers that provided their employees with a utility vehicle, taxi, or panel van were exempted from paying Fringe Benefits Tax associated (FBT) with their vehicles, while any passenger-type cars were not.

As part of the Australian Government’s push for reducing environmental impact and footprint, employers purchasing an electric vehicle for their employees will now be exempt from FBT.

Electric and hybrid-electric company vehicles, with a purchase price below the 2022-2023 luxury car threshold of $84,916 (including GST), purchased for employees, will no longer be subject to the FBT normally associated with cars. 

Employees will still be required to report the vehicle as a Reportable Fringe Benefit Amount (RFBA), to ensure the benefit is not used to reduce income tests and associated payments. 

EXAMPLE

Louise receives a salary of $250,000 and is considering packaging either an electric vehicle or a standard vehicle with her employer.  She does not do tax-deductible travel (approx 20,000km of private travel per year), so previously any salary packaging of her vehicle would not have been tax effective due to the FBT rules.  With the new legislation, the difference is stark.

By salary packaging an electric vehicle, Louise could receive an increase to her net disposable income of $8,986 and is also over $3,000 better off than if she packaged a much cheaper non-electric vehicle.  

Get In Touch

Reach out to the team to chat through these changes for your business and whether you or your employees could achieve substantial savings by packaging electric vehicles.