Electric & hybrid vehicle tax benefits

Significant Tax Benefits for EVs and Plug in Hybrid Vehicles (Company and Employee Benefits)

There have been initiatives introduced by the Federal government to increase the uptake of Electric and Hybrid vehicles.  These initiatives are designed to provide benefits to company owners and employees.

When you traditionally purchase a vehicle in your company, you incur a tax known as Fringe Benefit Tax (FBT) which often penalises companies for owning personal vehicles within a company by making it uneconomical to do so versus owning the vehicle in their own personal name.

Likewise, as an employee, if you salary sacrifice or enter novated lease for a vehicle, FBT is a component of that lease which increases the total amount paid for the vehicle over the term of the lease.

The incentives currently provided by the federal government for Plug in Hybrid purchases under $89,332 plus on roads are eligible to be purchased within a company/trust, with ZERO FBT impact.

This makes EVs and Plug in Hybrids under the $89,332 limit an extremely attractive proposition for many businesses.  In fact, a $60,000 petrol vehicle would be more expensive to own in a company (or novated lease by an employee) than a $89,332 EV/Plug in Hybrid vehicle!

In more detail, this means:

o    No Initial or ongoing FBT implications

o    Note that FBT reporting of employee benefit is still required

o    No FBT on its running costs or expenses of the vehicle (fuel, insurance, registration etc)

o    Ability to still claim up to $6,191 of GST on the purchase and claim GST on all running costs

o    Ability to still claim deprecation on the vehicle as per normal

o    Note that Novated Lease Contracts have own reporting requirements

Some popular EV/Plug in Hybrid vehicles that come under the threshold include:

o    MG HS+  (Plug in Hybrid) 

o    Tesla Model 3 / Model Y (EV) 

o    BYD Atto 3 / BYD Seal (EV)  

o    Mitsubishi Eclipse Cross (Plug in Hybrid)

o    Mazda CX-60 (Plug in Hybrid) 

o    Volvo XC-40 Recharge (EV)

o    BMW iX1 / iX2 / iX3 (EV) 

A point to note regarding Plug in Hybrid vehicles: this incentive ends on 31/3/2025 meaning that FBT will begin to apply once again after this day,  UNLESS you have an ongoing obligation (loan or lease) on the vehicle.  If there is an ongoing obligation, you can continue to benefit from no FBT on the vehicle or its expenses for the duration of that obligation.

Feel free to reach out to your Accountant or our Asset Finance specialist, Harry Ioannou, who can provide further information regarding this, as well as source and finance the vehicles described above.  Harry can also setup Novated Lease benefits for your company and staff.

Ph: 0423 087 077

Email: harryi@hmadvisors.com.au