The Treasury Laws Amendment (Electric Car Discount) Bill 2022 has been introduced into parliament and could see employees provided with electric vehicles with no tax implications if successful.

The bill has currently been referred to the Senate Economics Legislation Committee. The Committee is due to provide its report by 21 September 2022.

The exemption covers the provision of the vehicle and associated running costs. The exemption would also extend to exempt the benefit from payroll tax. Noting that the benefit will still be a reportable fringe benefit and therefore impact matters such as liability for Medicare Levy Surcharge, entitlement to some tax offsets and eligibility for certain family assistance payments.

The exemption will apply for vehicles first held on or after 1 July 2022.The vehicle must be below the fuel-efficient luxury car tax threshold – currently $84,916 for the 2022-23 financial year. The explanatory memorandum to the bill indicates it would apply to:

• Vehicles order prior to 1/7/2022 but not delivered until after
• Secondhand vehicles provided originally purchased:
  • As new on or after 1/7/2022
  • For a value under the exemption threshold

The proposed legislation provides the exemption for zero or low emission vehicles. The vehicle will need to meet specific criteria. The following will be included under this concession:

• Battery electric vehicles
• Hydrogen fuel cell electric vehicles
• Plug in hybrid electric vehicles

The following will NOT be included in this concession:

1. Self-charging hybrid electric vehicles
2. Electric motorbikes
3. Vehicles designed to carry a load of more than 1 tonne or more than 9 people (e.g. utilities or vans)

Noting other forms of transportation could be exempt under other provisions.

Although the concession would cover general vehicle running costs. It is unclear with respect to associated hardware, software, subscriptions and other applicable costs. For example, it is unclear as to whether the following fit under the exemption:

• A home charging station
• A replacement battery (which could cost over $10,000)

The concession could help business to attract and retain staff through attractive salary packaging policies and in addition assist a business to reduce their carbon footprint. A salary sacrificed vehicle eligible for this concession would see staff saving thousands in tax each year.

The bill includes a provision requiring a review in three years to ensure it remains effective.

See here for further information regarding the bill, explanatory memorandum or progress of the bill.

Please contact our friendly team if you would like further information on how these concessions might benefit you - 07 4688 8400.