Tax Breaks for EV’s
As part of the governments push to reduce emissions, there are some generous fringe benefit tax (FBT) savings for anyone looking to buy and use an eligible electronic vehicle in their business. A reminder – FBT is a tax on tax-free benefits to employees – such as the private use of cars, parking and food. The FBT rate is the highest marginal rate of 47% – making it quite unattractive in most cases. Also, the employer sometimes passes this FBT cost back onto the employee, generally when they get a novated lease through the employer.
Some quick points on the changes to FBT on eligible EV vehicles:
- Eligible EVs cannot have had luxury car tax paid on them – so they currently need to have a GST inclusive value less than $84,916;
- The car is first used after 1 July 2022;
- It is used by current employees or associates;
The changes mean that there are significant savings for clients who have vehicles in their business and use them for some private purposes.
The biggest hurdle now seems to be getting more options for EV’s in Australia compared to other parts of the world where the choice of EV is a lot higher. This new change may mean we get more options in Australia due to increasing the demand for such vehicles.
