Fringe Benefits Tax squashed the excesses of the 1980s.

Business owners once buried the costs of their big lunches, expense accounts, holidays, and private motor vehicle costs into the costs of their business. Those expenses were all pre-tax dollars.

For those who can remember, those were the good old days!

In 1986, this all came to an end when the new FBT legislation closed the door to these loopholes. Only very minor employee benefits subsequently squeezed through, and the legislation put a sudden end to all such excesses.

But the new FBT exemption that applies to Electric Vehicles brings back a fun part of this old tax perk! Business owners can now enjoy a qualifying car and are allowed to drive it for private purposes. In fact, entirely for private purposes if they wish.

Business owner can now package their own car, their spouse’s car and even their kid’s cars! No FBT on any qualifying vehicle.

Sparking excitement?

Don’t have a home charger? Frightened of running out of charge somewhere north of Seymour? Can’t give up petrol just yet?

Read on.

For a limited time, it is not just pure electric vehicles (EV’s) that qualify. Plugin Electric Hybrid Vehicles (PHEV’s) will also qualify to be exempt from FBT. This exemption lasts until 1/4/25, and after that date, continues for existing financially binding commitments on vehicles being provided.

Importantly, the exemption also applies to Associated Benefits such as … road charges, registration, insurance, repairs and maintenance, fuel, and electricity. Interestingly, the exemption does not apply to home chargers.

“Hybrid” (as opposed to PHEV) cars do not qualify.

Confused?

Here is an excellent short video <CLICK HERE> from carsales.com that not only explains the differences between Hybrid, PHEV and EV cars, but shows when, how and why you might choose one type over the other.

To qualify, the vehicle must be below the Luxury Car Tax threshold for EVs … $84,916 for 2023 (sorry, the amazing Porsche Taycan does not qualify) and lots of rules apply to second hand vehicles. There are over 30 brands and models to choose from. Car dealers will know which ones they can sell you!

Business owners can even provide these benefits to their employees …. although such arrangements can be a pain in the neck to administer and sometimes messy to clean up should an employee leave.  Nevertheless, employees may well ask for this from their employers. Read <here> how this might work.

As always, there are yet a few more rules and exemptions, so best to check with your tax adviser before leaping out to your car dealer.

With a bit of luck, you might be able to get stock of one of these vehicles and pick up a bit of that 80’s feeling of excess! And help save the planet.

Happy motoring!