If you are an employee able to salary package or business owner operating in a company or trust and looking to upgrade your car, now may possibly be a good time to consider going green with your vehicle choice.
The Labor Government’s first budget a couple of weeks ago delivered on their commitment to climate change when they introduced legislation to exempt certain eligible electric vehicles from fringe benefits tax. In fact, the Bill has already passed the House of Representatives and is currently before the Senate.
By removing the FBT on eligible electric cars employees can use their pre-tax salary (through a salary sacrifice arrangement) to fund the lease of a car for private use without having additional amounts deducted from their salary to fund the FBT rules.
A car benefit is an exempt fringe benefit (i.e. not subject to FBT) if:
- the car is a zero or low-emission vehicle (i.e. battery electric vehicles, hydrogen fuel cell electric vehicles and plug-in hybrid electric vehicles)
- the car is first held and used on or after 1 July 2022, and
- the value of the car at the first retail sale (GST inclusive) was below the luxury car tax threshold for fuel-efficient vehicles ($84,916 in the 2022/23 tax year). In other words, if the luxury car tax is applicable, the car benefit cannot be an exempt fringe benefit and FBT is payable.
For business owners, it gets even more attractive …
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