With the use of zero emission vehicles growing in Australia, and the recent FBT exemption on EVs, there is a challenge for calculating electricity expense incurred while charging Electric Vehicles (EVs) at home which can be used by employers and individuals for FBT and income tax purposes.
To address these challenges on 31st March 2023, the ATO developed a proposed methodology to calculate the cost of electricity when an electric vehicle is charged at home, however, the guideline applies to zero emission vehicles only and outlines the relevant provisions for which the electric vehicle home charging rate may be applied. Plug-in hybrids with an internal combustion engine are excluded.
Who is the guideline for?
- Employers who provide a zero emission vehicle to an employee for private use resulting in the provision of a car fringe benefit, residual fringe benefit or payment of expenses associated with the car resulting in a car expense benefit.
- Employers who provide a zero emission vehicle to an employee who charges the vehicle using electricity at home.
- Individuals who use a zero emission electric vehicle while travelling for work and when incurring electricity expenses for charging at home.
The EV home charging rate can also be used to determine the home electricity charging costs for both the statutory and operating cost methods for car fringe benefits.
The guideline states that for the 2022 -2023 FBT year or income year, EV users can claim 4.2c per km travelled in the year for home charging expenses. It’s important to note that if claiming the home charging rate, you cannot also claim charging from public charging stations.
A home charging electricity deduction will be based on the number of business kilometres travelled by making a reasonable estimate, taking into account any logbooks maintained, odometer records etc. Taxpayers are also obligated to maintain accurate record of expenses to establish proportion of private and business travel and an electricity bill for residential premises to demonstrate costs incurred while charging the electric vehicle.
To read the complete draft guideline with examples, refer to the ATO compliance guideline PCG 2023/D1 here.