2024 Fringe Benefits Tax: Part 1

2024 Fringe Benefits Tax: Part 1

The Fringe Benefits Tax (FBT) year ends on 31 March. In the upcoming weeks, we will be outlining the hot spots for employers and employees.

  • Part 1: hotspots + FBT exemption for electric cars + working with the exemption.
  • Part 2: WFH arrangement + contractor or employee.
  • Part 3: not lodging FBT returns + housekeeping.

Part 1: hotspots + FBT exemption for electric card + working with the exemption

Important FBT Issues

FBT exemption for electric cars

To encourage the adoption of no or low emissions vehicles, the Government introduced a concession to provide an exemption from FBT for electric cars, hydrogen fuel cell electric cars or plug-in hybrid electric cars when provided to employees. This should normally be the case where:

  • The value of the car is below the luxury car tax threshold for fuel efficient vehicles (which is $89,332 for 2023-24 financial year); and
  • The car is both first held and used on or after 1 July 2022.

Working with the exemption

Even if the FBT exemption applies, your business will still need to work out the taxable value of the benefit as if the FBT exemption didn’t apply. This is because the value of the exempt benefit is considered when calculating the reportable fringe benefits amount of the employee. While income tax is not paid on this amount, it can impact the employee in a range of areas (such as the Medicare levy surcharge, private health insurance rebate, employee share scheme reduction, and social security payments).

This means the employee’s own home electricity costs incurred on charging the electric vehicle would often need to be worked out. The ATO has finalised a guideline providing a 4.20 cent per km shortcut rate (excluding plug-in hybrids) that can potentially help with this calculation. This figure can generally be treated as an employee contribution to reduce the value of the benefit.

Many electric vehicles are also packaged together with electric charging stations. Just be aware that the FBT exemption for electric cars does not extend to charging stations provided at the employee’s home.

If you would like to discuss, please contact our office