The government has introduced a bill into parliament which seeks to amend the treasury laws in relation to the Fringe Benefits Tax assessment Act 1986.
With an emphasis on climate action, the bill would make electric cars supplied by employers to their employees, exempt from Fringe benefits tax (FBT).
Where would this exemption apply?
In an attempt to increase the uptake of electric vehicles in Australia, this incentive will reduce the ownership cost associated with certain eligible electric vehicles.
The FBT discount will only apply the following eligible electric cars: battery electric cars, hydrogen fuel cell cars or plug-in hybrid electric cars.
Additionally, the discount will only apply to the eligible electric cars that have a first retail price below the fuel efficient luxury car tax threshold of 84,916 in 2022-23. This exemption will apply to eligible electric cars readily accessible for use on or after 1 July 2022.
How would this exemption apply?
The electric vehicle discount would save employers considerable amounts in Fringe benefits tax.
Under this arrangement, a vehicle valued at $50,000 provided by an employer, would save the employer up to $9,000 annually in FBT.
For persons who seek to purchase the same vehicle through salary sacrifice, they would save up to $4,700 annually.
How long would it apply?
In order to effectively promote the uptake of electric vehicles into the Australian market, the FBT exemption for electric cars will be introduced as an ongoing measure that is subject to review every three years.
Separate to this bill, the government has proposed the expansion of Australia’s first national Electric Vehicle Strategy along with the removal of the 5% import tariff on eligible electric vehicles, enabling faster uptake of electric vehicles and reductions in the transport emission sector.