To support the growth of electric car ownership, the Australian Government will allow employers to offer tax cuts to current employees when purchasing an EV. This will make electric vehicles more accessible than ever before.
The Electric Car Discount Bill is set to become law and states that cars that are zero or low emissions vehicles with a value lower than the luxury car tax threshold for fuel-efficient vehicles will be exempt from Fringe Benefits Tax (FBT).
This is a significant step that will see individuals saving up to $4,700 when purchasing through a salary sacrifice car scheme. Businesses investing in cars worth up to $50,000 can expect to save up to $9,000.
What is Fringe Benefits Tax?
When purchasing a car through a salary sacrifice scheme or leasing a car through their company, employees are liable to pay Fringe Benefits Tax. However, once the Electric Car Discount Bill becomes law, electric cars that are salary-packaged will be exempt from FBT.
What types of zero or low emissions vehicles will be exempt from Fringe Benefits Tax?
The Electric Car Discount Bill applies to battery electric, hydrogen fuel cell electric and plug-in hybrid electric vehicles.
The car value must be lower than the Luxury Car Tax (LCT) threshold, which is $84,916 for 2022/2023.
To be eligible, the vehicle must have been received on or after 1st July 2022. Second-hand EVs may qualify, providing they were first purchased new on or after this date.
Supporting the transition to zero emissions driving
To underscore its commitment to hitting zero emissions targets, the Australian Government’s own fleet of vehicles will go electric. As part of its Zero Emissions Vehicles Strategy 2022-30, the ACT Government has also promised to do the same and ‘lead the way’ in terms of a carbon-free future.
If you have been considering purchasing, this latest exemption is an attractive offer to switch to an electric vehicle. ActewAGL is unable to provide financial advice so we recommend you discuss your options with your tax accountant to learn exactly what these savings mean for you or your business.
- The Australian Government will be providing tax cuts to employees who purchase an EV.
- EVs that are salary-packaged or leased will be exempt from FBT.
- To be eligible, you must have purchased a new or second-hand EV on or after 1st July 2022.
ActewAGL can help you effortlessly find, finance, and charge your EV. Discover how ActewAGL can support your transition to sustainable driving today.