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New Employee Benefits Tax Exemption for Electric Vehicles: What You Need to Know

We are excited to share that there have been new developments on the issue of employee benefits tax (FBT) exemption for electric vehicles that many company directors and employees are concerned about. The Treasury Laws Amendment (Electric Car Discount) Bill 2022 (the Bill) has now passed both Houses of Parliament with two amendments from the Senate and received Royal Assent on 12 December 2022.This legislation grants a tax exemption for eligible electric vehicles that are allocated as an employee benefit, which means that the corresponding FBT will be waived.

So, what do you need to know about the implementation of this policy? Here are the key points:

From July 1st, 2022, eligible electric vehicles (for business or personal use) provided to employees can be exempted from FBT. To be eligible for the FBT exemption, the electric vehicle must meet all the following criteria:

  • Zero-emission or low-emission electric vehicle

  • First held and used after July 1st, 2022

  • Used by a current employee or their associates (such as family members)

  • Not subject to the Luxury Car Tax

How is zero-emission or low-emission electric vehicle defined? It can be:

  • A battery electric vehicle

  • A hydrogen fuel cell electric vehicle, or

  • A plug-in hybrid electric vehicle (not applicable after April 1st, 2025)

  • The vehicle is designed to carry fewer than 1 tonne and fewer than 9 passengers (including the driver).

For example, a zero-emission electric vehicle valued at $48,000 would require an annual FBT payment of $9,385.86 without the exemption. The exemption would provide significant relief from this cost.

We are delighted to witness the implementation of this policy and believe that it will not only bring convenience to the company and employees, but also be a policy beneficial to improving the environment.

To learn more information, please click the link to access the ATO official website.


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