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Electric vehicles (EVs) have become exempt from the levy for the first time as the end of FBT year rapidly draws to a close.
The ATO has advised businesses and their tax practitioners that as the FBT year draws to a close, they should already be working on what items they can claim in their lodgement.
The tax office said for businesses not lodging through a tax practitioner, the lodgement date would be 22 May; for those lodging electronically via a tax practitioner, the due date would be 26 June.
The ATO also warned businesses to contact them if it was the first time they would be lodging with a tax practitioner before 21 May, as they would need to add them to their FBT client list by then to ensure they were eligible for the later June lodgement and payment date.
The biggest change to FBT within the 2023 FBT year — which spans from 1 April 2022 to 31 March 2023 — was the introduction of the electric car exemption.
The Treasury Laws Amendment (Electric Car Discount) Act 2022 received royal assent on 12 December 2022, which meant EVs provided to employees for private use are now exempt from FBT.
International accounting and auditing firm Mazars said it expected many employers to receive an influx of requests for EVs to be a part of their salary packaging and cautioned businesses to understand the added impact it could have.
“Given the potential savings available and the popularity of EVs, we expect many employers will receive requests for EV salary packaging arrangements and business owners may also consider their own arrangements,” said Mazars.
“While purchasing a car predominantly for private use through a trading entity may not have been an attractive option in the past, this tax-saving opportunity will cause some to reassess.”
Even though the legislation had gone through, EVs must still meet a strict criteria to be eligible for the ATO’s FBT exemption.
The criteria included that the EV must have been first held and used after 1 July 2022 and satisfy zero or low-emission vehicle conditions by being a battery EV, a hydrogen fuel cell EV, or a plug-in hybrid EV.
The selected vehicle must also be used by a current employee or their associates; it cannot be used by past or future employees.
The EV must also never have had luxury car tax paid on its supply or importation. For the 2022–23 financial year, the luxury car tax threshold for fuel-efficient vehicles was $84,916; any new EVs purchased must be cheaper than this amount.
If the EV was a second-hand vehicle, then the onus was on the employer to research prior sales to determine whether the luxury car tax was ever applicable to it.
The ATO also clarified that home charging stations would not be an exempt expense, with employers who were planning to provide an employee with one at home must handle the fringe benefit separately, even if packaged in the leasing arrangement.
However, charging stations provided on the business premises would be FBT exempt, along with the electricity provided to charge the vehicle there.
The ATO also reminded those who previously registered for FBT but do not need to lodge this year that they must send the tax office a notice of non-lodgment by the time the return would normally be due to prevent it from seeking a return at a later date.
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