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 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) (eg a family member); and
- Luxury car tax has never been payable on the import 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.