A full FBT exemption for electric vehicles was introduced into parliament on 27 July 2022. This exemption is designed to bolster the government’s support for the take up of electric vehicles by decreasing the price difference compared to combustion engine cars.

Date of effect

The exemption will apply to eligible cars first held and used on or after 1 July 2022. Eligible cars ordered before 1 July 2022 but not delivered until after 1 July 2022 are still eligible for the exemption.

However, eligible cars held before 1 July 2022 will not be eligible for the exemption.

Car requirements

The exemption will apply to zero or low emissions cars being:

  • battery electric vehicles;
  • hydrogen fuel cell electric vehicles; and
  • plug-in hybrid electric vehicles.

A car with an internal combustion engine will only be eligible if it can be fueled by a battery that can be recharged by an off-vehicle power source (i.e., plug-in hybrid car).

The exemption only applies to vehicles that are ‘cars’ for the purposes of the FBT Act. Vehicles that are not cars, which can carry a load of one tonne or more, or nine passengers or more, will not be eligible for the exception.

These types of vehicles have their own exemption, commonly known as the Dual cab UTE exemption, which has additional requirements: mainly, private use of the vehicle is required to be limited to:

  • travel between home and work
  • travel that is incidental to travel in the course of employment duties
  • non-work-related use that is minor, infrequent and irregular.

These requirements have not been mirrored in the proposed FBT exemption for electronic vehicles.

Cost limit

To be eligible for the exemption, the value of the car at the first retail sale price must be below the fuel-efficient luxury car tax threshold of $84,916 for the 2022-2023 year.
In addition to the FBT exemption, the government has also announced that from 1 July 2022, the customs duty of 5% will be removed on electric vehicles, plug-in hybrid vehicles and hydrogen fuel-cell vehicles with a customs value less than the fuel-efficient luxury car tax threshold.

Limitations

The proposed legislation, as it stands, advises that the exemption will be reviewed in three years to determine whether concessions will be continued and, if continued, what amendments will be made. The legislation does not provide guidance on ‘grandfathering’ of any arrangements that have been entered into before this three-year review.

The exemption is also silent on the provision of any ancillary benefits, such as the installation of charging stations at the employee’s residence. At the present time, these benefits would be a separate fringe benefit provided; however, not eligible for an exemption.


Sources
https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6876

https://www.abf.gov.au/help-and-support-subsite/CustomsNotices/2022-34.pdf

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