Why you should buy your electric car through your company

Many drivers are looking to make the switch to an electric car, whether it’s an EV (electric vehicle), BEV (battery electric vehicle) or ZEV (zero-emission vehicle) with the cost of fuel adding to the demand.

Prices for new electric cars remain high, but state and territory governments are investing in charging infrastructures and are keen to incentivise people to go electric by offering a number of rebates and tax exemptions.

Fringe Benefit Tax

Fringe Benefit Tax (FBT) rules changed from 1 July 2022 employers do not pay FBT on eligible electric cars and associated car expenses.

Am I eligible?

You do not pay FBT if you provide private use of an electric car that meets all the following conditions:

• the car is a zero or low emissions vehicle
• the first time the car is both held and used is on or after 1 July 2022
• the car is used by a current employee or their associates (such as family members)
• luxury car tax (LCT) has never been payable on the importation or sale of the car.

Benefits provided under a salary packaging arrangement are included in the exemption.

Associated car expenses

The following car expenses are exempt from FBT if they are provided for an eligible electric car:

• registration
• insurance
• repairs or maintenance
• fuel (including electricity to charge and run electric cars).

You may be able to reduce the FBT on any items that aren’t exempt car expenses, if the expenditure would have been deductible to the employee had they incurred it themselves.

Home charging station

A home charging station is not a car expense associated with providing a car fringe benefit for electric cars. However, it may be a property fringe benefit or an expense payment fringe benefit.

Goods and Services Tax

Goods and services tax (GST) is a tax of 10% on most goods, services and other items sold or consumed in Australia. Companies can also claim the 10% (GST) back if GST registered when purchasing an electric car.

Rebates

There are also state rebates available: -

• NSW - Electric Vehicle Rebate | Revenue NSW
• Victoria -  Zero Emissions Vehicle (ZEV) Subsidy | Solar Victoria
• Queensland - Zero Emission Vehicle Rebate Scheme | Queensland Rural and Industry Development Authority (qrida.qld.gov.au)
• Western Australia - Zero Emission Vehicle (ZEV) Rebate (transport.wa.gov.au)

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Date published 4 Mar 2023 | Last updated 4 Mar 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.