There has never been a better time to buy an Electric or Hybrid Vehicle!

Fringe Benefits Tax (FBT) is a tax employers will pay on benefits paid to an employee (or their associate, such as a family member) in addition to their salary or wages as this is separate to income tax. FBT is generally calculated over a period of 12 months beginning 1^st of April and ending March 31^st the following year.

While FBT helps companies recruit high quality employees, most common fringe benefits like health and life insurance are not taxable.  The Fringe Benefits Tax (FBT) is levied on employers, but often passed-on to employees who lease their car through work, leaving employers with potentially less in their pocket. This means FBT will effect an individual’s net pay as fringe benefits are counted as income which you will need to pay tax on.

However the government has now passed legislations stating that as an individual if you were to purchase an electric car you may be exempt from paying this FBT which means a tax saving for both employer and employee. See example below.

If you are a business and spend approximately $77,000 on a new hybrid/electric car after June 2022 and you meet the criteria for FBT exemption you could claim back a total tax deduction and GST amount of $20,600 bringing your new cars price down to $56, 401.

As an individual you can still claim without an exemption but subject to the capped limit as well as a gross up factor of 2.0802% and a FBT tax rate of 47%. This would bring your car down to $68,881 giving you a saving of $12,480 on the purchase price.