FBT-Free EVs - Time to make the Switch?

The ATO has released a fact sheet for employers on FBT obligations when providing an employee with an electric vehicle and associated items for their private use. The fact sheet highlights the following key points:

An FBT exemption may apply to a car benefit arising from making available an electric vehicle (EV) to an employee, or their associates, for their private use.

From 1 April 2025, private use of a plug-in hybrid EV is no longer eligible for the exemption unless: (i) use of the plug-in hybrid electric vehicle was exempt before 1 April 2025; and (ii) the employer has a financially-binding commitment to continue providing private use of that vehicle on and after 1 April 2025.

If an employer or lessor provides an employee with the use of a car by means of a lease arrangement, the benefit provided is only a car benefit if it is a bona fide car leasing arrangement.

Associated benefits arising from the provision of certain car expenses provided with the EV are also exempt from FBT. They are not included when working out the reportable fringe benefits amount.

Providing an employee with a home charging station is a fringe benefit.

If the use of the car and the associated car expenses are provided under a salary sacrifice arrangement, the exemption can still apply.

Even if an exemption applies for the EV car benefit, the employer still needs to work out the taxable value of the car benefit provided, in working out if the employee has a reportable fringe benefits amount.