Plug-in Hybrid Electric Vehicles (PHEV)

From 1 July 2022, if you had a car which is a zero or low emissions vehicle you have not been required to pay FBT if you provide private use of that vehicle to an employee or associates of the company.

See our original article for more information Insights – FBT and EV – What does it mean? – Alto

 

What is a zero or low emissions vehicle?

Currently the definition of a zero or low emissions vehicle includes:

1. • battery electric vehicle
   • hydrogen fuel cell electric vehicle, or
   • plug-in hybrid electric vehicle (this does not include hybrid vehicles only fuelled by liquid petrol.

It is a car designed to carry a load of less than one tonne and fewer than 9 passengers (including the driver).

 

From 1 April 2025, plug-in hybrid electric vehicles will no longer be considered a zero or low emissions vehicle under FBT law.

 

So, what can you do prior to 1 April 2025?

If you are looking at purchasing or leasing a plug-in hybrid electric vehicle and wish to utilise the FBT exemption, you need to ensure the following are met:

1. It is available for use by 31 March 2025 (delivered, registered and driving the vehicle) OR
2. Lease agreement must be current and in effect by 31 March 2025

 

What if you already have a plug-in hybrid electric vehicle in your fleet of cars?

Ensure these vehicles are assigned to an employee with an agreement in place prior to 31 March 2025.  If you currently have a pool of cars which aren’t assigned to an employee, for you to continue to get the exemption, you must assign these to an employee with an agreement in place prior to 31 March 2025.  Otherwise, the vehicle will be no longer eligible for the FBT exemption.

 

What if you have an option on your lease to extend?

If you have an option on your lease agreement to extend for a further term, if this extension option is after 31 March 2025, then the extension term is no longer eligible for the FBT exemption.  For example, a lease begins on 1 April 2023 for 5 years, to 31 March 2028.  There is an option to extend the lease for a further 2 years from 1 April 2028.  The exemption will continue to apply to 31 March 2028 as the vehicle was being used prior to 1 April 2025 and the requirements of the electric car exemption are met and there is a binding agreement to continue providing the vehicle until 31 March 2028.

 

What if you need to change the car due to a car accident?

If you had entered a lease agreement prior to 31 March 2025 and were involved in an accident with the vehicle being treated as a write off, as long as the replacement vehicle is a comparable model with similar features (as agreed by the insurance company) and the replacement vehicle is noted on the existing contract, and all other conditions of the contract remain the same, there is no alteration to the pre-existing contract which began prior to 31 March 2025 and therefore doesn’t result in a new contract.  The FBT exemption continues for the remainder of the lease period as long as there are no changes to the lease.

 

ATO Watchlist and Requirements

Even if you provide a zero or low emissions vehicle to an employee, you are still required to calculate the Reportable Fringe Benefit Amount (RFBA). If the amount is more than $2,000, then this must be reported to the ATO via payroll.

If you are providing vehicles to employees or associates you need to ensure you categorise the vehicle correctly.  There are different categories for vehicles.

1. Cars designed to carry less than 9 passengers (including the driver).
2. Cars not designed to carry passengers but have a good carrying capacity of less than one tonne – this will include most of dual cab utes.
3. All other vehicles with a higher carrying capacity over one tonne.  These are not classified as cars, but can still be captured under the fringe benefit rules

Journey’s that involve travelling from home to work, getting lunch, picking up children from school are examples of private use.

 

Log Books

Log books need to include enough information to clearly identify the use of the vehicle for each journey.  Log books should include the following for each journey:

• Start and end dates
• Start and end odometer readings
• Kilometres travelled
• Purpose of the journey (just to put business is not sufficient, more information is need for specifically what the journey was for)

Business and private journeys should be recorded as separate entries.

 

ATO’s Four Key Steps for FBT Reporting:

1. Identify if you are providing a benefit and the type of benefit it is
2. Work out the taxable value of the benefit provided, there are different methods to calculate the taxable value depending on the type of benefit
3. Lodge the report and pay, this may include reporting the taxable value through single touch payroll and lodging a FBT return with the ATO
4. Keep records! There are different rules and obligations around record keeping.  You need to ensure that you have all records in place and retain them.

 

How Can Alto Help?

If you have any questions around EV’s and FBT exemptions or FBT requirements for vehicles, please reach out to one of our team who will be happy to assist further.

 

Authors: Tanya Holtham