Electric Vehicles - a tax effective choice - O'Brien Accountants & Advisors

Electric Vehicles – a tax effective choice

Are you considering upgrading your vehicle? Have you explored the benefits of electric vehicles (EVs)?

The Government’s incentive for consumers to consider electric vehicles heralds a new era of affordability and sustainability in vehicle choices, delivering attractive tax benefits.

Under new regulations, employees can take advantage of packaging up the acquisition and running costs of an EV, all while sidestepping any FBT charges on personal use. This shift means that opting for an electric vehicle becomes a more tax-efficient choice compared to a fossil fuel vehicle of the equivalent price.

O’Brien’s Principal, Chris Mullins, shares the four key eligibility criteria and why the purchase of an EV may be a tax efficient choice.

Please contact us if you would like to explore how the purchase of an EV may be a tax effective choice for you.

Video transcript

Chris Mullins:

Well folks I’ve done it, I’ve taken the plunge into the world of electric vehicles, EVs. In this next two videos I’m doing I’m going to talk about firstly the tax concessions that are available for electric vehicles and then in the second video I’m going to talk about some other matters such as infrastructure and charging but first of all let’s talk about the tax concessions and they’re very generous.

They’ve been designed by government to effectively encourage consumers to purchase low emission vehicles and steer away from fossil fuel vehicles and essentially what they’ve done is they’ve made the use of electric vehicles and the acquisition of electric vehicles exempt from fringe benefits tax purposes. So what are the concessions?

Well first of all you need to satisfy four parts the first is the car has to be a zero or low emission vehicle, the second part is the car has to be held or used after 1 July 2022, the third part is that the car needs to be used by either an employee or a family member of the employee and finally the car can have no luxury car tax payable on either the importation or purchase of the vehicle.

However, most importantly these vehicles can be packaged up under a salary sacrifice arrangement where the employee can enter into a novated lease and fund the cost of the car through their gross earnings, that’s right not their after tax earning. So they get to fund the purchase of the vehicle through pre-tax dollars so on a vehicle that comes in under the luxury car tax threshold which is just under $90,000 and assuming that somebody’s on the top marginal rate of tax, the tax concessions on that are going to be about $35,000 so that’s reducing the cost of the vehicle from just under $90,000 to just on $55,000. This is very, very attractive and one of the reasons why I decided to take the move into electric vehicles.

If you would like to know more about it I’m Chris Mullins please contact me at O’Brien’s, thanks very much.

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Electric Vehicles – a tax effective choice

Please contact us if you would like to explore how the purchase of an EV may be a tax effective choice for you.

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