Eligibility
You do not pay Fringe Benefits Tax (FBT) if you provide private use of an electric car that meets all the following conditions:
- the car is a zero or low emissions vehicle
- the first time the car is both held and used is on or after 1 July 2022
- the car is used by a current employee or their associates (such as family members)
- luxury car tax (LCT) has never been payable on the importation or sale of the car.
Associated car expenses
The following car expenses are exempt from FBT if they are provided for an eligible electric car:
- registration
- insurance
- repairs or maintenance
- tyres
- fuel (including electricity to charge and run electric cars).
Car Parking expenses incurred whilst charging the vehicle are not exempt. A periodic Global Positioning System subscription is not a car running expense and is therefore not exempt from FBT.
Plug-in hybrid electric vehicles-1 April 2025 onwards
From 1 April 2025, a plug-in hybrid electric vehicle will not be considered a zero or low emissions vehicle under FBT law. However, you can continue to apply the exemption if both the following requirements are met:
- Use of the plug-hybrid electric vehicle 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. For this purpose, any optional extension of the agreement is not considered binding.
Home charging station / cables
- A home changing station is not a car expense associated with providing a car fringe benefit for electric cars.
- However, it may be a property fringe benefit or an expense payment fringe benefit
Repairs or maintenance – Batteries – repair or capital?
Expenses relating to repairs or maintenance of the electric vehicle are exempt, as long as the expenses are not capital expenses. A capital expense is money spent to purchase or substantially improve assets-for example, adding new features or upgrading a car.
Electric vehicle batteries are expected to last a long time before replacement is required. It is anticipated that over that time, there will be rapid technological advances regarding battery capability.
Where an enhancement arises from the use of more modern materials or component parts (such as new battery technology available in the future), a replacement battery may still be a repair where it adds in only a minor and incidental way to the overall efficiency of function of the vehicle and is a modern-day equivalent of the previous battery. Where a replacement battery is a capital expense, the battery will form part of the cost price of the electric vehicle when working out the taxable value of the car benefit for the FBT year in which it is installed and future years.