Electric cars have been gaining popularity due to their eco-friendly nature and lower operating costs. As an employer, you now have the option to provide electric cars to your employees as a tax-exempt benefit. Previously, employers were required to pay Fringe Benefits Tax (FBT) on electric cars provided to employees, but as of July 1, 2022, this has changed.
To be eligible for the tax exemption, the car must meet the following criteria:
- The car must be a zero or low-emissions vehicle.
- The first time the car is both held and used must be on or after July 1, 2022.
- The car must be used by a current employee or their associates, such as family members.
- Luxury car tax must never have been payable on the importation or sale of the car.
In addition to being exempt from FBT, expenses for registered, insured, repaired, maintained and fuelled electric cars are also exempt from FBT. However, it is important to note that despite the exemption, the taxable value of the benefits provided still needs to be determined and included in the employee’s Reportable Fringe Benefits Amount (RFBA). The RFBA must then be reported on the employee’s income statement or payment summary.
If you are an employer, consider providing electric cars as a tax-exempt benefit to your employees. This can be a cost-effective way to show your employees that you care about their well-being and the environment. If you need help with determining the taxable value of the benefits provided, please give Central Coast Bookkeeping & Payroll and we can assist.
Contact us if you need any assistance.
