4.2 cents per km for electric cars

We know that SOME electric cars are exempt from FBT, but even if they are exempt, we still need to work out the taxable value so we can work out the reportable fringe benefit amount to put on a payment summary (yes, it is exempt but it is still reportable).

And to work out the taxable value, we need to know what the recipient contributions are – which include the cost of the electricity to recharge the batteries at home.

This would be an impossible task to work out so the Commissioner has just released a draft Practical Compliance Guideline (PCG 2023/D1) that says we can just assume 4.2 cents a kilometre.

This 4.2 cents per kilometre can also be used for working out deductions for a car we use for business purposes as well.

The problem is if you charge at home and at a commercial charging station. Under this Guideline, if electric vehicle charging costs are incurred at home and at a commercial charging station, a choice has to be made. The EV home charging rate of 4.2 cent per kilometre can be used, but only if the commercial charging station cost is disregarded. If the commercial charging station cost is used, the EV home charging methodology set out in this Guideline cannot be applied.

  1. Sue owns an electric vehicle. She usually charges it at home and occasionally at a commercial charging station. Her electricity purchase from the commercial charging station was $250 for the income year. Sue has kept the relevant records and opts to rely on this Guideline. Using the EV home charging rate, Sue calculates her electricity work-related car expenses to be $840. Given Sue has relied on this Guideline, she must disregard the $250 cost of electricity purchased at a commercial charging station and not include the amount as part of her work-related car expenses deduction claim.

And now some examples…

An employer purchased an electric vehicle for $60,000 (including goods and services tax) on 1 July 2022. It was provided to an employee for private use for the 2022-23 FBT year, and the employee travelled a total of 27,037 kilometres.

As the value of the electric vehicle at the first retail sale was below the luxury car tax threshold for fuel efficient vehicles, and it was first held and used on or after 1 July 2022, the car fringe benefit was an exempt benefit and therefore not subject to FBT.

However, its taxable value must be determined for the purpose of determining the employee’s RFBA for the 2022-23 FBT year in which the exempt benefit is provided.

The employee home-charged the electric vehicle throughout the year, paid the electricity bills and provided the employer with the necessary declaration for the electricity costs. The home charging electricity cost formed part of the recipient contribution amount.

Applying the EV home charging rate, the employee worked out the home charging electricity cost as:

electric vehicle electricity charging cost = total km travelled by vehicle × 4.20c per km 

27,037 km × 4.20c per km = $1,135 

Therefore, the taxable value for FBT purposes is:

base value of the car × statutory formula % × days held in year ÷ 365 - recipient contribution 

$60,000 × 20% × 274 ÷ 365 - $1,135 = $7,873 

As the taxable value of the car fringe benefit provided to the employee exceeds $2,000 in the FBT year, the employer must include the grossed-up taxable value in the employee’s RFBA

Or an example claiming a tax deduction…

Ephrem is an owner of an electric vehicle that satisfies the definition of a ‘car’ and charges its battery at his home on average 3 nights per week.

He drives the electric vehicle for both business and private purposes. He keeps a logbook for 12 continuous weeks to record his business travel, which is broadly representative of travel throughout the whole year. He has recorded the odometer readings at the start and end of the logbook period, and the start and end of the income year. For the 2022-23 income year, these records show Ephrem drove a total of 32,000 kilometres.

Ephrem’s logbook and odometer records show a total of 8,000 kilometres were travelled for the 12-week logbook period. 4,000 kilometres were for work-related purposes. As Ephrem’s logbook is representative of the business kilometres he travelled during the 2022-23 income year, his business use percentage will be 50% and his total business kilometres will be 16,000 (32,000 kilometres × 50%).

Applying the EV home charging rate, Ephrem calculates his home electricity charging cost and his home charging electricity deduction as:

home charging electricity cost = 32,000 km × 4.20c = $1.344 

home charging electricity deduction = 16,000 km ÷ 32,000 km × $1,344 = $672 

Ephrem can claim a home charging electricity deduction of $672, along with 50% of his other car expenses, for the 2022-23 income year.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: