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Tax Incentives for Electric Vehicles

Date: 1 February 2024

From 1 July 2022, employers do not pay FBT on eligible electric cars and associated car expenses if they meet the following conditions:

  1. The car is a zero or low emissions vehicle – battery electric, Hydrogen fuel cell electric, plug in hybrid electric vehicles with less than 1 tonne/fewer than 9 passengers.
  2. The first time the car is both held and used is on or after 1 July 2022.
  3. The car is used by a current employee or their associates (such as family members).
  4. Luxury car tax (LCT) has never been payable on the importation or sale of the car – current threshold for 2024 FY is $89,332 if fuel efficient vehicle.

This makes purchasing an electric vehicle (EV) in the business very tax effective with deduction claims up to the depreciation cost limit ($68,108 less GST) and a proportional GST claim of 1/11 x $68,108 (or car value – whichever is less) x business use % (logbook required).

One catch is that whilst FBT exempt it is nonetheless reportable for FBT purposes and so requires an FBT return to include the value of the benefit when working out whether an employee has a reportable fringe benefit amount (RFBA).

With regard to installing a charger in the office carpark this would be a claimable expense under 2024 instant asset write-off regime (up to $20,000).

Talk to your team at Roberts + Morrow if you have any questions or queries on this.

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