The Australian Taxation Office (ATO) has released a draft update to Practical Compliance Guideline PCG 2024/2, proposing new rules to support employers and individual taxpayers in calculating the cost of electricity used to charge plug-in hybrid electric vehicles (PHEVs) at home.
Previously, the guideline only applied to zero-emissions electric vehicles. This draft—titled PCG 2024/2DC—is a major development for employers managing electric vehicle benefits and individuals using plug-in hybrids for work-related travel.
Why this matters
Many electric and plug-in hybrid vehicles are charged at an employee’s or individual’s home, yet separating the charging costs from general household electricity use can be complex and time-consuming.
For Fleet Managers, Payroll Teams and HR departments, this update offers a simplified and ATO-endorsed methodology for determining these costs—critical when calculating Fringe Benefits Tax (FBT), expense reimbursements, or individual tax deductions.
What’s new in the draft?
The updated guideline includes a tailored seven-step methodology for plug-in hybrids that recognises their dual fuel nature (electricity and petrol). The electricity component of a PHEV’s operation can now be calculated using the same 4.20 cents per kilometre rate that applies to fully electric vehicles, but adjusted based on the proportion of electric versus petrol-powered travel.
Key steps include:
- Calculating actual petrol costs and quantity.
- Estimating petrol-powered kilometres using the vehicle’s manufacturer fuel economy rating.
- Subtracting those from total annual kilometres to isolate electric-powered travel.
- Multiplying electric kilometres by the standard rate to determine home charging cost.
For FBT purposes, the methodology can be used to calculate the taxable value of:
- Car fringe benefits
- Expense payment benefits
- Residual fringe benefits
For income tax, it can be used by individuals to claim work-related vehicle deductions using the logbook method.
Transitional arrangements
The ATO recognises that not all fleets or taxpayers may have complete records going back to the start of the relevant year. The guideline allows for reasonable estimates to be used for the 2024–25 FBT and income tax years based on service records or logbooks, particularly where odometer or petrol data isn’t available.
Who can use this guideline?
You can rely on the new guideline if:
- You’re an employer providing a zero-emissions vehicle or PHEV for private use, including through novated leasing, and the vehicle is charged at an employee’s home.
- You’re an individual using an EV or PHEV for work and claiming car or motor vehicle expenses on your tax return.
In both cases, you must retain appropriate records—such as odometer readings, receipts for fuel, and a single electricity bill showing the home charging location.
What about commercial charging?
The guideline provides options if you also use public or commercial charging stations:
- If your vehicle can accurately report home charging percentage (via telematics or in-vehicle systems), you can claim both home and public charging costs proportionately.
- If it cannot, you must choose to either:
- Use the 4.20c/km home charging rate and ignore commercial charging costs, or
- Use actual commercial charging expenses and not apply the home charging rate.
Examples included
The draft guideline includes real-world scenarios:
- How to calculate reimbursements under novated lease agreements.
- Calculations for FBT-exempt EVs and PHEVs.
- Logbook-based deductions for work-related travel in PHEVs.
- Scenarios where vehicles exceed the luxury car tax threshold and are ineligible for exemption.
Have your say
The ATO is seeking feedback on the draft guideline and welcomes submissions from employers, industry groups, tax professionals, and individuals.
🗓 Submissions close: 25 July 2025
📧 Send your comments to: PAGSPR@ato.gov.au
📞 Contact officer: Amber Ibbott – 03 5227 1553
The ATO may publish an edited version of submissions in a public compendium, so be sure to indicate if you wish for your comments to remain confidential.
Final thoughts
This draft is a positive step towards reducing compliance friction for electric and hybrid vehicle users. For Fleet Managers and Sustainability Managers overseeing electric vehicle transitions, this update offers a clear and practical method for calculating vehicle charging costs—particularly valuable in light of growing plug-in hybrid uptake.
Fleet professionals are encouraged to review the full guideline and make submissions before the deadline to help shape the final ruling.
For access to the full draft guideline, visit the ATO website or email the contact listed above.
