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March 12, 2024

Electric Vehicles home charging costs for FBT and income tax

The Australian Tax Office (ATO) has recently established its guidelines on how to calculate the cost of electricity for charging electric vehicles at home for Fringe Benefits Tax (FBT) and income tax purposes. This means that you can now claim 4.2c per km travelled when charging from home.

The changes from the draft version include an extension of the transitional rules for keeping odometer readings, which now apply to the commencement of the 2023/24 FBT and income years. These changes provide businesses with additional time and flexibility in complying with the guidelines.

Key Takeaways

  • The Practical Compliance Guide PCG 2024/2 outlines a shortcut method of 4.2c per kilometre rate for determining the electricity charging costs of EVs.
  • This rate is effective from 1 April 2022 for FBT purposes and from 1 July 2022 for income tax purposes.
  • If you are an employer or an individual choosing to rely on the EV home charging rate to calculate the electricity charging expenses, you will need to keep a record of the distance travelled by the car (odometer records) in either the applicable FBT year (ending 31 March) or the income year (ending 30 June).
  • If the home has solar panels that produce sufficient electricity, such that no direct electricity costs have been incurred, then the 4.2c/km method cannot be applied.
  • The shortcut method is only applicable to fully electric vehicles and excludes plug-in hybrids or electric motorcycles and scooters.
  • If an employer or individual decides to use the above shortcut cents per kilometre method provided by the PCG, they must disregard any other actual charging costs incurred, including costs from commercial charging stations.

Employers and individual taxpayers can choose to use this simplified method to estimate an EV’s electricity costs based on total distance travelled, and this can be changed annually on a per-vehicle basis.

For income tax deductions

Individual taxpayers can claim their EV’s electricity costs as a tax deduction in their personal income tax return if they own or lease the car in their own name. They can use either the cents per kilometre method or the logbook method to determine work-related usage of the vehicle.

Where home charging percentage cannot be accurately determined

If electric vehicle charging costs are incurred at a commercial charging station and the home charging percentage cannot be accurately determined, you can choose to either:

  • use the EV home charging rate, but only if the commercial charging station cost is disregarded, or
  • use the commercial charging station cost, but only if the EV home charging methodology set out in this Guideline is not applied.

Further, all necessary records such as receipts must be kept substantiating the claim, as per normal record-keeping rules. If odometer records have not been maintained as at the start of the 2022–23 or 2023–24 FBT or income tax years, a reasonable estimate may be used based on service records, logbooks, or other available information.

By maintaining accurate records, you can easily track, and document various aspects related to electric vehicles’ home charging costs, such as the date and time of charging, the duration of each charging session, and the amount of electricity consumed. Additionally, recording relevant information, such as the vehicle’s odometer readings, aids in determining the precise distance travelled and supports the cents per kilometre calculation method.

With accurate record keeping, you can confidently substantiate your calculations and provide evidence of compliance with applicable regulations.

To read the complete draft guideline with examples, download the ATO compliance guideline PCG 2024/2 here.

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