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FBT exemption for electric cars: Legislation passed by Parliament
Technical article

FBT exemption for electric cars: Legislation passed by Parliament

On 25 November 2022, the Senate passed the Treasury Laws Amendment (Electric Car Discount) Bill 2022 with amendments. The amendments were accepted by the House of Representatives on 28 November and the Bill now awaits Royal Assent.

This bill was introduced by the Government in August 2022 to provide an exemption from Fringe Benefits Tax (“FBT”) for a car fringe benefit attributable to an eligible low or zero emission car (i.e., battery electric vehicles; hydrogen fuel cell electric vehicles; and plug-in hybrid electric vehicles). The exemption is intended to encourage a greater take up of fuel-efficient cars and reduce Australia’s carbon emissions.

For more information in relation to this exemption see our previous article.

What were the amendments made by the senate?

The Senate made the following two amendments:

  1. The exemption for plug-in hybrid electric vehicles will cease to apply for new car fringe benefits provided on or after 1 April 2025. Arrangements in relation to plug-in hybrid electric vehicles entered into prior to 1 April 2025 will continue to be exempt. Further, the exemption for other types of electric vehicles (i.e. battery electric vehicles and hydrogen fuel cell electric vehicles) will remain in place.
  2. A mandatory review will have to be undertaken in three years to determine effectiveness of this exemption and confirm that it is achieving its purposes.

What are the next steps?

Clients should contact their Pitcher Partners representative to discuss their queries in relation to this exemption.

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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