The ATO has released a new fact sheet on the FBT exemption for electric cars. While the fact sheet doesn’t necessarily contain any new information, it does help to clarify some key points.
For example, the ATO confirms that the exemption can only apply if the employee is provided with a car fringe benefit. This would normally be the case if the employer owns or leases the car and then allows an employee to use it. The exemption cannot apply to other types of fringe benefit such as expense payment fringe benefits (e.g., reimbursing the purchase cost incurred by the employee), or residual fringe benefits (e.g., where the vehicle is not classified as a car).
Only benefits provided to current employees and their associates are eligible for the exemption. That is, even though the FBT system can capture benefits provided to past and future employees, the FBT exemption for electric cars cannot apply to these benefits.
The ATO confirms that ‘car expense benefits’ relating to an exempt electric car can be exempt from FBT too. ‘Car expense benefits’ in respect of the car include:
• Registration and road user charges
• Insurance
• Repairs or maintenance
• Fuel (including electricity to charge and run an electric car).
However, the exemption cannot apply if the employee is provided with a home charging station. This is likely to trigger an FBT liability of the employer. Even if the FBT exemption applies it is still necessary to calculate the taxable value of the benefit using either the statutory formula method or operating cost method. This is because the amount is taken into account in calculating the reportable fringe benefit amount of the employee which could impact on their ability to access other Government benefits.
Employees who use the car for work or business purposes should be encouraged to keep a valid logbook so that the operating cost method can be used in calculating the reportable fringe benefit amount if this provides a lower figure.