Electric Cars and RFBA

From 1 July 2022, employers do not need to pay fringe benefits tax (FBT) on eligible electric cars and associated car expenses.

Unlike other FBT exemptions, employers still need to determine the taxable value of the exempt car benefits to include it in their employee’s reportable fringe benefits amount (RFBA).

If the total value of reportable fringe benefits provided to an employee during the FBT year is more than $2,000, employers must report the grossed-up amount of the benefits on the employee’s income statement or payment summary.

Although the amount of RFBA is not added to an employee’s taxable income for determining their income tax, it is used by the ATO and Services Australia to determine certain obligations and entitlements.

For a full list of the consequences of having an RFBA, refer to consequences of having a reportable fringe benefits amount.

Your employees should speak to their registered tax agent for further advice.

For more information, visit ato.gov.au/FBTelectriccars

Example scenarios
Example 1: An employee has a car provided to them For both of the following scenarios, the outcome is the same. Exclusive use of an electric car: Charging Volts Co. purchases a new eligible electric car on 1 September 2022 and provides it to its employee Roni for exclusive (private and work) use. Charging Volts Co. does not provide any other reportable fringe benefits to Roni. Novated lease: Roni enters into a novated lease with Charging Volts Co. and his salary packaging provider (SPP) to salary sacrifice part of his wage for a fully maintained eligible electric car. The SPP manages all the administration, including sourcing the new car. It is delivered to Roni on 1 September 2022. Charging Volts Co. does not provide any other reportable fringe benefits to Roni.

Example scenarios

Example 1: An employee has a car provided to them

For both of the following scenarios, the outcome is the same.

Exclusive use of an electric car: Charging Volts Co. purchases a new eligible electric car on 1 September 2022 and provides it to its employee Roni for exclusive (private and work) use. Charging Volts Co. does not provide any other reportable fringe benefits to Roni.

Novated lease: Roni enters into a novated lease with Charging Volts Co. and his salary packaging provider (SPP) to salary sacrifice part of his wage for a fully maintained eligible electric car. The SPP manages all the administration, including sourcing the new car. It is delivered to Roni on 1 September 2022. Charging Volts Co. does not provide any other reportable fringe benefits to Roni.

Employer obligations	Employee impacts
Charging Volts Co. must work out the notional taxable value of the exempt car benefit for the fringe benefits tax year. If it exceeds $2,000, Charging Volts Co. must report the ‘grossed up’ amount, known as the reportable fringe benefits amount, on Roni’s income statement or payment summary. Salary packaging providers: To assist Charging Volts Co. when calculating the notional taxable value of the exempt car benefit (using the statutory formula method, in this instance), the salary packaging provider providesCharging Volts Co. with the base value of the car and number of days used/available.	If the notional taxable value of the exempt car benefit is more than $2,000 for the fringe benefits tax year, employers will need to include the reportable fringe benefits amount (RFBA) on the employee’s income statement or payment summary. Although employees don’t pay income tax on their RFBA, it is included in income tests for certain government benefits and obligations. If an employee lodges their tax return online through myTax or via a tax agent, it will include any pre-filled RFBA.

Employer obligations

Employee impacts

Charging Volts Co. must work out the notional taxable value of the exempt car benefit for the fringe benefits tax year.

If it exceeds $2,000, Charging Volts Co. must report the ‘grossed up’ amount, known as the reportable fringe benefits amount, on Roni’s income statement or payment summary.

Salary packaging providers:

To assist Charging Volts Co. when calculating the notional taxable value of the exempt car benefit (using the statutory formula method, in this instance), the salary packaging provider providesCharging Volts Co. with the base value of the car and number of days used/available.

If the notional taxable value of the exempt car benefit is more than $2,000 for the fringe benefits tax year, employers will need to include the reportable fringe benefits amount (RFBA) on the employee’s income statement or payment summary.

Although employees don’t pay income tax on their RFBA, it is included in income tests for certain government benefits and obligations.

If an employee lodges their tax return online through myTax or via a tax agent, it will include any pre-filled RFBA.

Example 2: Pooled or shared electric car

Sparks & Lightning Co. purchases a new eligible electric car on 1 September 2022 for private and business use by all 5 of its employees. Sparks & Lightning Co. does not provide any other fringe benefits to its employees.

Employer obligations	Employee impacts
The electric car is a pooled or shared car, as multiple employees were able to use the same car during the fringe benefits tax year for private purposes. This means it is not a reportable fringe benefit. Therefore, Sparks & Lightning Co. does not need to: · include the reportable fringe benefit amount on any employees’ income statements or payment summaries, or · calculate the notional taxable value, because it is an excluded car benefit.	There is no reportable fringe benefit impact.

Employer obligations

Employee impacts

The electric car is a pooled or shared car, as multiple employees were able to use the same car during the fringe benefits tax year for private purposes.

This means it is not a reportable fringe benefit. Therefore, Sparks & Lightning Co. does not need to:

· include the reportable fringe benefit amount on any employees’ income statements or payment summaries, or

· calculate the notional taxable value, because it is an excluded car benefit.

There is no reportable fringe benefit impact.

Example 3: Individual buys a car directly

If an individual purchases an eligible electric car for their private use, and pays for all associated running costs, there is no fringe benefits tax impact for an employer. There is also no reportable fringe benefit impact for an employee.

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