FUN-B-TAX

Fun B(s) Tax, officially known as Fringe Benefits Tax (FBT), was a tax introduced to kill the vibe. It specifically taxes long lunches, expensive gifts, parties, corporate boxes, and motor vehicles.

Albo recently passed legislation, which was introduced by Scomo, to allow an FBT exemption on electric vehicles and hybrids; which we think is pretty funtastic.

Rules

You (as the employer) will not pay FBT if you provide an employee with an electric car that meets all of the following conditions:

  • The car is a zero or low emissions vehicle (Electric cars exemption | Australian Taxation Office (ato.gov.au))

  • The first time the car is both held and used is on or after 1 July 2022

  • The car is used by a current employee or their associates (such as family members)

  • Luxury car tax (LCT) has never been payable on the importation or sale of the car

  • Running costs associated with the electric car are exempt also

Benefits provided under a salary packaging arrangement are included in the exemption.

Albo advised they will review this exemption again in 2027.

How much can you spend

To be eligible for the exemption, the value of the car must be below the LCT threshold (Luxury car tax rate and thresholds | Australian Taxation Office (ato.gov.au)) for fuel efficient vehicles at the time it is first sold in a retail sale, and in any subsequent sale. For the 2023 financial year this amount is $84,916 (inc GST).

If you purchase a second hand vehicle you need to ensure it was not subject to LCT at any time in the past.

What could you buy

We have kicked a few tyres and here are our top 3 picks:

  1. Volvo XC40 Recharge. A true accountants car - safe, reliable, not real quick.

  2. Telsa Model 3 Long Range. Who needs the performance model, with a top speed 233km/h and  0-100 in 4.4sec, you’ll be at every meeting on time and real fast.

  3. Mini Cooper SE. Fun, stylish and fun.

We aren’t car people, please ensure you check that the above qualify before you purchase.

Get in touch with m+h Private today on +61 3036 7174 to see how we can help deliver the best support to you and your business.

As always, the above is general in nature, please discuss with your trusted advisor.

James Hoeftm+h Private