Electric Car FBT exemption awaiting Royal Assent

The exemption will cover zero or low emission vehicles, with values below the luxury car tax threshold for fuel efficient cars (currently $84,916), being:

• Battery electric vehicles
• Hydrogen fuel cell electric vehicles
• Plug-in hybrid electric vehicles

Second hand cars can qualify, but only if their first retail sale was on 1 July 2022 or later.

Salary packaged cars qualify for the exemption.

The exemption does not cover vehicles other than ‘cars’ as defined in the FBT law. Any vehicles designed to carry one tonne or more, or nine passengers or more, will not qualify for this particular exemption. (however the existing residual benefit exemption may apply).

The exemption applies retrospectively from 1 July 2022, to cars first held and used by a person on 1 July 2022 or later. Cars ordered prior to 1 July 2022 will qualify if they were not delivered until 1 July 2022 or later.

Plug-in hybrid electric vehicles will no longer be exempt from FBT after 1 April 2025. Pre-existing arrangements with such cars can continue as FBT exempt until the end of the particular arrangement.

Private use of these cars will still result in reportable fringe benefits for employees, including for employees of not-for-profit employers. Therefore employers will still need to perform FBT related calculations for these vehicles.