1. Reportable fringe benefits
For any electric car benefits exempted from FBT, the notional taxable value of this exempt benefit is still required to be included in the reportable fringe benefits amount calculation for an employee. There are certain exemptions, including where the car is a pooled or shared vehicle.
As this treatment is different to the usual treatment of exempt fringe benefits, check with your payroll software provider that they have made the necessary changes to provide accurate reporting to the ATO. Reportable fringe benefits are not directly taxed, but may affect eligibility and income tests for certain government benefits and obligations.
2. Payroll tax implications
While exempt fringe benefits are generally excluded for payroll tax purposes for all States and Territories, it is important to keep up-to-date with any changes of treatment (e.g. State governments may amend payroll tax legislations which will result in different treatment in the future).
3. Sunset clause on plug-in hybrid electric cars
From 1 April 2025, plug-in electric cars will no longer be considered as zero or low emission vehicles, ceasing them to be eligible for the FBT exemption. Transitional rules apply to existing arrangements to allow continuous exemption if the following requirements are met:
The use of the plug-in hybrid electric car was exempt before 1 April 2025.
You have a financially binding commitment to continue providing private use of the vehicle on and after 1 April 2025.
Thus, care should be taken when considering changes to the arrangements on or after 1 April 2025 as these may jeopardize any FBT exemption previously applicable to a plug-in hybrid electric car. Refinancing the car, optional extension to the arrangement, and change of employer are example of changes which may cease the plug-in hybrid electric car’s eligibility for the FBT exemption on or after 1 April 2025.
4. Reimbursement of electricity for electric cars
Employees may seek reimbursement of the electricity cost to charge the electric cars. Although electricity to charge and run electric cars has been confirmed by the ATO to be a car expense, there is currently no guidance provided by the ATO on how to calculate these costs. It may be prudent to wait for the ATO’s guidance before entering into an agreement with employees to reimburse electricity costs to charge and run the electric cars.