End of FBT Year Reminder

The Fringe Benefits Tax (FBT) year ends on 31 March, and it’s crucial for businesses to be prepared to meet obligations.

Electric Vehicle FBT Exemption

Eligibility Criteria

Employers may be eligible for an FBT exemption if employees use qualifying electric vehicles (EVs). The exemption applies when:

• The vehicle is zero or low-emission (battery electric, hydrogen fuel cell, or plug-in hybrid electric).
• It was first owned and used on or after 1 July 2022.
• The vehicle’s value is below the luxury car tax threshold ($89,332 for FY 2024–25).

Plug-In Hybrids: Ending the Exemption

From 1 April 2025, plug-in hybrid electric vehicles will no longer qualify for the FBT exemption unless:

• The vehicle was already used under the exemption before that date, and
• There is a legally binding agreement for continued private use.

Any change to the agreement on or after 1 April 2025 typically results in losing the exemption.

 

Reportable Fringe Benefits Still Apply

Even with an exemption, employers must still determine the taxable value of the benefit, as it affects the employee’s reportable fringe benefits total. This can impact:

• Private health insurance rebates
• Employee share schemes
• Medicare levy surcharge

Employers must consider electricity usage costs when employees charge vehicles. The ATO has introduced a shortcut rate of 4.2 cents per kilometre to simplify calculations.

Home Charging Stations

While electric charging stations are typically included with EVs, home-installed charging stations are not exempt under FBT rules.

 

Providing Equipment to Remote Workers

With remote and hybrid working models common, many businesses provide portable electronic devices. These are typically exempt from FBT if:

• They are primarily used for work.
• There is a formal agreement between employer and employee.
• Proper classification advice has been obtained.
• The worker has met all tax, superannuation, and reporting obligations.

If contractors are engaged, agreements should be periodically reviewed to ensure correct classification. Even genuine contractors can trigger employer-like obligations (e.g., payroll tax, super).

 

Simplifying FBT Record Keeping from 1 July 2024

From 1 July 2024, employers can:

• Continue using traditional record-keeping;
• Use business records that meet legal standards;
• Or combine both approaches.

Key legislative instruments include:

• Travel diaries – LI 2024/11
• Living-away-from-home declarations – LI 2024/4, LI 2024/5
• Otherwise deductible rule declarations – LI 2024/6

 

Minor Benefits & Entertainment

Benefits under $300 are often exempt from FBT, but GST credits and tax deductions may not be allowed unless FBT applies.

If using the 50/50 method:

• 50% of entertainment expenses are FBT-taxed.
• 50% of GST credits can be claimed, and 50% of the cost is deductible.
• Minor benefits exemptions do not apply.

 

If you have any questions relating to FBT or exemptions, please do not hesitate to contact Bates Cosgrave.