Electric Vehicles, especially below a certain range, would be more affordable for businesses, due to a new change in law for FBT. The Treasury Laws Amendment (2022 Measures No 2) Bill has passed the Parliament and introduces electric car discounts as an FBT exemption.
Car benefit will be an exempt benefit for a year of tax, if:
· The car is zero or low emissions vehicle and includes electric or hybrids until 1 April 2025
· Initial retail sale price of the car was below the luxury car threshold for fuel-efficient vehicles i.e. $84,916 currently, and
· The car is first held and used on or after 1 July 2022
For a customer with
· Gross income of $95,000
· Using a 36-month novated lease
· To buy a 2022 Tesla Model Y
· EMI would reduce from $1,863 p.m. to $1,364
· Total savings of $29,451 over the lease period
For the employer, in the same example of Tesla valued at $64,000, the company would save $12,500 due to the change in FBT.
However, car fringe benefits that are exempt from FBT will continue to be included in the employees’ individual fringe benefits amount for the purposes of determining the employee’s reportable fringe benefits amount.