Labor Electric Car FBT discount

[Speedst3r]

I thought the post-tax payments (Employee contribution) were collected by your employer to cover their FBT liability.

ECM is you contributing to the cost of the benefit which results in your employer's FBT liability being zero - so that money can't be "refunded", it has already been used to pay the lease and running costs. The cost of leasing the vehicle doesn't change - it's just that you now don't have to contribute to it out of your own pocket and it can come out of your pre-tax salary.

It may be possible for your employer to reimburse you an amount equivalent to the income tax and GST that would not have been payable had 100% of the benefit been paid from pre-tax salary, and adjust your payment summary to reflect this but they would probably need advice from the ATO to ensure this is not a problem.

It's probably easier for your employer not to do anything and the excess tax withheld will be identified when you submit your tax return and will be refunded.

 

[cafz]

ECM is you contributing to the cost of the benefit which results in your employer's FBT liability being zero

Right. There wouldn't be any point in incurring the full FBT liability and then reimbursing your employer for it - it'd cost as much as your tax savings.

 

[evbee]

They could have made it easier by making it an income tax deduction. One per taxpayer. But I get that the government also wants to help the finance industry with all the fuss around novated leases.

 

[Speedst3r]

the government also wants to help the finance industry with all the fuss around novated leases.

The government wants to improve take-up of EVs. The method they have identified to reduce the cost is to incentivise fleet purchases (company owned and leases), these vehicles will then be available on the second hand market when companies/leases turn the vehicles over.

 

[Loxmyf]

The government wants to improve take-up of EVs. The method they have identified to reduce the cost is to incentivise fleet purchases (company owned and leases), these vehicles will then be available on the second hand market when companies/leases turn the vehicles over.

That's been my argument to people who think the ACT plan to ban new petrol/diesel car sales by I think 2030 (correct me if I'm wrong). There'll be 2-4 cycles of government fleet cars, which are already starting to be BEV or PHEV cars. That will significantly improve the scond hand market of BEVs, relieving some pressure of buyers not able to afford new BEVs (even though they've never bought a brand new petrol car, and the second hand petrol market won't be particularly affected by the banning of new car sales)

But even if the lower number of ICE vehicles in the second hand market drives up the ICE second hand market such that a new BEV is cheaper for the life of the loan anyway.

 

[pongie]

The concern with the second hand market for BEV and PHEV are the state of the battery. Buyers already have range anxiety with purchases of new vehicles, do you really think the same buyers will want to get into a second hand car with degraded battery?

 

[banana0692]

Does anyone know if there has been any movement on the royal assent?

 

[Vostok]

The concern with the second hand market for BEV and PHEV are the state of the battery. Buyers already have range anxiety with purchases of new vehicles, do you really think the same buyers will want to get into a second hand car with degraded battery?

Well we have a Nissan Leaf which has 120 km range and is fine for its city runabout purposes. A 20 year old Tesla Model 3 would probably still do better than that, and not cost very much, so why wouldn’t it find a buyer?

 

[Priit]

Well we have a Nissan Leaf which has 120 km range and is fine for its city runabout purposes. A 20 year old Tesla Model 3 would probably still do better than that, and not cost very much, so why wouldn’t it find a buyer?

I so agree with @Vostok on this. I have a little over 3 year old Model 3 that has done a little over 50k km that will go on second hand market when my new Model 3 arrives and I can tell you that with 50k and 3 years that car has less than 1% battery degradation. There are people online with same cars and 500k km-s on the battery and say the battery degradation is only 3-4%. For my kind of driver to reach 500k km on it, would take 30 years so I suspect at least on Tesla the battery on second hand markets is not an issue. I suspect by the time that market starts actually taking off, that information will be much improved as currently Tesla fleet and all other EV cars are rather new and theres no really long term data on its endurance. First Teslas came to Australia less than 10 years ago. This is why fud has been easy to spread by people with vested interests or just hatred for change. This should change once actual long term data and research kicks in.

 

[AussieOwner]

Does anyone know if there has been any movement on the royal assent?

Labor has been on fire lately with legislation so I am wondering this too. I know multiple legislative wins wont take affect till this happens (IR reforms for example).

 

[Vostok]

Labor has been on fire lately with legislation so I am wondering this too. I know multiple legislative wins wont take affect till this happens (IR reforms for example).

No, it hasn’t received assent yet. When it does, this page will say its Status is “Act” and not “Passed Both Houses”

Treasury Laws Amendment (Electric Car Discount) Bill 2022

Helpful information Text of bill First reading: Text of the bill as introduced into the Parliament Third reading: Prepared if the bill is amended by the house in which it was introduced. This version of the bill is then considered by the second house. As passed by

www.aph.gov.au

I would expect this to happen within the next week.

 

[New Tech Bj]

Labor has been on fire lately with legislation so I am wondering this too. I know multiple legislative wins wont take affect till this happens (IR reforms for example).

More importantly we need the ATO direction to lease providers. The Greens promised this would include how to include charging infrastructure in salary sacrificing as well. Hopefully this quickly follows the royal ascent.

 

[Speedgull]

Question about new legislation. Does the FBT exemption expire on 1 April 2025 mean you only get the exemption during this period (2.25 years), so if you finance the vehicle over 5 years then you are up for FBT on everything after 1 April 2025. Or, if you purchase a EV vehicle between 1 July 2022 and 31 March 2025 then FBT exemption applies to that vehicle for it's life?

If the first then the benefit would quickly be eroded by actual FBT. If the vehicle remains on the books after 1 April 2025 the tax would be greater than the saving and therefore would not be attractive at all

 

[evbee]

Has anyone taken up a 1 year NL and then renew the NL for a 2nd or 3rd year down the track? (to try and bring forward the FBT benefits)

 

[Arturro]

Question about new legislation. Does the FBT exemption expire on 1 April 2025 mean you only get the exemption during this period (2.25 years), so if you finance the vehicle over 5 years then you are up for FBT on everything after 1 April 2025. Or, if you purchase a EV vehicle between 1 July 2022 and 31 March 2025 then FBT exemption applies to that vehicle for it's life?

If the first then the benefit would quickly be eroded by actual FBT. If the vehicle remains on the books after 1 April 2025 the tax would be greater than the saving and therefore would not be attractive at all

From my understanding it doesn’t expire. Phev vehicles will be phased out and the legislation will be reviewed

 

[cafz]

Does the FBT exemption expire on 1 April 2025 mean you only get the exemption during this period (2.25 years), so if you finance the vehicle over 5 years then you are up for FBT on everything after 1 April 2025. Or, if you purchase a EV vehicle between 1 July 2022 and 31 March 2025 then FBT exemption applies to that vehicle for it's life?

It's not clear, because the enacted provisions in regard to BEVs do not sunset on 1 April 2025 - the Minister is just committed to reviewing the operation of the Act. However, the law does sunset on 1 April 2025 for PHEVs, and the way it is written existing leases entered into before that date are covered until they finish (so you could take out a 5 year lease on a PHEV in March 2025 and still get the FBT exemption until it finished in 2030). Presumably, if they later withdraw the benefit for BEVs (which will take legislation passed through parliament to achieve) they'll do the same for those.

If the first then the benefit would quickly be eroded by actual FBT. If the vehicle remains on the books after 1 April 2025 the tax would be greater than the saving and therefore would not be attractive at all

That's not really true anyway, even if the exemption ended you'd just switch to making some post-tax contributions which would reduce the ongoing benefit but you'd still be ahead from the first few years.

 

[cafz]

Has anyone taken up a 1 year NL and then renew the NL for a 2nd or 3rd year down the track? (to try and bring forward the FBT benefits)

You can re-lease once a lease expires (unless the car is now too old) but there is no sense in which you can "bring forward the FBT benefits".

 

[Priit]

I noticed the status has changed to Assent on this:

Treasury Laws Amendment (Electric Car Discount) Bill 2022

Helpful information Text of bill First reading: Text of the bill as introduced into the Parliament Third reading: Prepared if the bill is amended by the house in which it was introduced. This version of the bill is then considered by the second house. As passed by

www.aph.gov.au

Not sure if that means its in process of getting it or it has already got it.

Assent Act no: 86 Year: 2022

12 Dec 2022

 

[Vostok]

I noticed the status has changed to Assent on this:
Not sure if that means its in process of getting it or it has already got it.

I think it means the Bill has been prepared for Assent and the package is with the GG for signing. So any day now…

It’s not listed as an Act yet in the Federal Register of Legislation.

 

[BBGuy]

So it’s official?