The popularity of electric vehicles in fleets, and for novated leases, is challenging the traditional interpretation of eligible motor vehicle expenses. The issue was highlighted when the FBT Exemption for low emission vehicles was introduced last year.
The Australian Tax Office (ATO) has clarified which associated car expenses will be FBT Exempt if being provided for an eligible electric vehicle. They are:
- registration
- insurance
- repairs and maintenance
- fuel (including electricity to charge and run electric cars)
An area that has been widely discussed is the installation of EV chargers at an employee’s home. Many people believe this should be a vehicle expense and included in the list of FBT Exempt items. However if the charger is used by the employer for a non-company vehicle, or retained by the employee when they cease employment, a Fringe Benefit might be provided.
The ATO has now clarified on their website that home chargers will not be included in the FBT Exemption calculation.
The ATO website states, A home charging station is not a car expense associated with providing a car fringe benefit for electric cars.
This ruling could create a number of issues for organisations and Fleet Managers if they do not correctly record and classify the installation costs of EV home chargers. For employees that buy an EV for a novated lease, the easiest thing might be to arrange and pay for the EV charge infrastructure outside of the lease.
