FBT Exemption For Electric Cars

The 2023 FBT year ended on 31 March, so it is now time for employers to get ready to lodge their 2023 FBT returns, where they have provided benefits to their employees (or their associates) between 1 April 2022 and 31 March 2023.

Until recently, the FBT consequences for providing electric cars to employees were effectively the same as any other car.

However, from 1 July 2022, FBT is no longer payable on benefits provided for eligible electric cars and associated expenses.

Practically, this exemption will be relevant for the first time in the 2023 FBT year.

Broadly, benefits provided for electric cars will be exempt from FBT where the following criteria are met:

• 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 associate(s) (e.g., a family member); and

• Luxury car tax has never been payable on the importation or sale of the car.

Registration, insurance, repairs, maintenance and fuel expenses provided for eligible electric cars are also exempt from FBT.

Note that, while the benefit is exempt from FBT, the taxable value of the benefit must still be determined when working out whether an employee has a reportable fringe benefits amount to be included on their income statement or payment summary.

Please contact our office if you have any queries about this new exemption and how it may affect your obligations for the 2023 FBT year.