Did you know? Employers do not pay FBT on eligible electric cars!
Understanding the tax implications is crucial with the increasing adoption of electric vehicles (EVs) in the business sector. At Sphere, we’re here to shed light on the latest ATO guidelines regarding FBT on electric vehicle home charging rates and how they impact businesses like yours.
Navigating FBT guidelines
The ATO has recently finalised guidelines outlining the methodology for calculating the cost of electricity for FBT purposes when an eligible EV is charged at an employee’s or individual’s home. The 4.20 cents per kilometre rate now applies, effective from 1 April 2022 onwards. To utilise this rate, employers must maintain records of the distance travelled by the EV, with a valid logbook required if the operating cost method is used.
Flexibility for employers
Employers now have the flexibility to choose between using the prescribed methodology or determining the actual cost incurred for electricity. This choice applies to each vehicle for the entire FBT year, allowing businesses to tailor their approach to suit their specific circumstances.
Eligibility criteria
It’s essential to note that these ATO guidelines apply only to zero-emission EVs and not to plug-in hybrid vehicles or electric motorcycles/scooters. This distinction ensures clarity and consistency in applying FBT exemptions to eligible vehicles.
Transitional period
For the 2022–2023 and 2023–2024 FBT years, a transitional approach allows employers to use reasonable estimates based on service records or other available information if odometer records haven’t been maintained. However, after this transitional period, keeping records of distance travelled and a valid logbook becomes mandatory.
Consideration for taxable value
While eligible EVs may be exempt from FBT, it’s crucial to include the benefit in an employee’s reportable fringe benefits amount. This ensures compliance with tax regulations, with the home charging electricity cost forming part of the recipient contribution amount if the employee has charged the EV at home and provided the necessary declaration for electricity costs.
The Sphere difference
We understand the unique challenges faced by businesses like yours, whether you’re in manufacturing, trades, or any other industry. Our personalised approach ensures you receive tailored guidance that aligns with your business objectives and maximises benefits while minimising tax liabilities.
With the ATO’s updated guidelines on FBT for electric vehicle home charging rates, businesses have the opportunity to embrace sustainable practices while effectively managing their tax obligations. We’re committed to helping you navigate these complexities with confidence, ensuring compliance, and maximising your business’s benefits.
Reach out to us today to learn more about how we can support your journey towards a tax-efficient future.
Expert Business and Tax Advisors: We work for YOU, not the ATO!
About Sphere Accounting & Advisors-
At Sphere Accountants and Advisors, we’re more than just accountants. We’re protectors of your wealth, steadfast in our commitment to keep as much of your money in your hands as legally possible. Remember, we always work for you, not the ATO.
When you choose us as your tax advisor in Australia, you’re not just a client, you’re part of our team. We consider the complete picture and are always on the lookout for ways to help you to create, safeguard, and grow your wealth. This commitment holds whether you approach us as an individual or a business entity.
Our expertise isn’t confined to just taxation. We span across the realms of accounting, strategic planning, tax advisory and beyond, delivering a whole solution to fit your needs. With Sphere Accountants and Advisors, you gain a dependable ally in navigating the complex accounting landscape.
For more information, please visit our website, give us a call at (03) 8899 6399, or drop us an email. We look forward to assisting you on your financial journey.
