Important things to note about the Australian Government’s employer FBT exemption legislation for electric vehicles.
Eligible vehicle criteria
Vehicles that are Battery Electric (BEV) or Hydrogen Fuel Cell (FCEV).
Must be deemed a ‘car’ for Fringe Benefit purposes (under 1 tonne payload and 8 seats or less).
New and Used vehicles that are first held and used on or after 1 July 2022 (first ever registered after 01/07/2022).
Must be provided to a current employee.
The vehicle must never have sustained Luxury Car Tax (LCT). There must be evidence that the supply from the EV vendor to Toyota Fleet Management TFM fell within the Financial Years since legislated and did not exceed the LCT threshold for fuel-efficient cars for the corresponding year when sold new.
How could this Bill impact you?
The employer FBT exemption legislation for EVs should result in material packaging gains for an employee, as compensation costs to the employer for the FBT exempt Novated Lease is entirely pre-tax and thus is more income tax effective.
For employees of exempt or rebatable employers, this employer FBT exemption, will not impact or utilise the per employee cap and therefore the cap can be used for other fringe benefits.
Employee’s Reportable Fringe Benefits Amount (RFBA) for an FBT year will still be required to be determined and reported, as if there was no employer FBT exemption.
While the RFBA is not personal taxable income to the employee, the total RFBA from all employment is taken into account when determining the eligibility for certain government benefits, concessions, and calculating various payments. Examples where RFBA amounts may have potential adverse impacts to an individual and their family include: changes to HECS/HELP debt repayments, Child Care Subsidies, Family Tax Benefits, Child Support obligations etc. A full list can be found at this link on the ATO website. The RFBA will be shown on the employee’s income statement through ATO online services in myGov.
