Labor Electric Car FBT discount

[mikkaat]

I read through the submissions and I tend to agree with much in them. I would also like to see another addition to the law, but am not really legally savvy, so hope that someone thinks of this and sends a submission for them
When I spoke to my employer about ending my current Tesla Model 3 novated lease early and getting a new one to save on FBT and they said their contract with the novated lease company has been amended and now they cannot purchase cars that cost over government set Car Depreciation Limit that is around $64k this year and is inclusive of stamp duty.
So it would be nice to amend that new EV legislation and add a clause to the legislation that amends the Car Depreciation Limit bringing that limit for zero emissions vehicles to the same level as LCT, this would greatly increase the available options for companies that have similar limit as my employer. And this would likely increase the ZEV uptake because of the extra vehicles the businesses could fit under that limitation.

I also work for an organisation that limits the price of a novated leased vehicle to the government set Car Depreciation Limit. I placed my order for a 3rwd before the price increase. One Novated provider is providing feedback that the vehicle will be above the limit, while the second (we can go through any of two providers) is saying it is under.... Frustrating. Agree, this limit needs to increase for zero emission vehicles (but from a business model from the governments perspective, that's one way to not have to give tax breaks to a larger amount of people)

 

[Jusebert]

I've got my order from April 20th (before the price rise) which comes in at $81,770 which is below the LCT. I assumed that the new legislation would have been based on having to pay LCT for the car (so not including stamp duty, registration fees, etc) so that I could ass EAP and still come in under the ~$84900 figure.


The word "retail value" makes me think that is not the case so I'm just going to keep it as is to make sure my car is eligible and if I want to add EAP later I will, just means it wont be added to my lease and be a 30% discount less finance costs.

 

[Jusebert]

On Tuesday 23 August 2022, the committee resolved to report on the provisions of the bill on 6 September 2022.

 

[hobz_]

On Tuesday 23 August 2022, the committee resolved to report on the provisions of the bill on 6 September 2022.

I spoke to Paywise earlier today, I really hope the legislation comes through so that I can get a clearer picture. My finance expires in November.

 

[Priit]

I did contemplate placing an order now anyhow, and hoping the date of sale occurs after the legislation drops to be sure... but with prices just gone up on the whole range, I might just hold out a bit and see if prices drop a bit once the inflation gets under control... or impatiently order anyway when the law drops

So with my case, the novated lease company originally refused to even look at Tesla as it was priced above the cost their contract with my employer stated, so I argued with my employer and got them to pre-approve the higher cost and then I asked the novated lease company to provide 2 quotes. 1 with the FBT included and the other without FBT. I told them that if I order the car, it will be more than half a year anyways until I get the car, so they will have to re-issue the quote anyways and then depending on legislation can go the best way. They agreed and I placed my order. So now its a waiting game for me

 

[Erasmuz]

The word "retail value" makes me think that is not the case so I'm just going to keep it as is to make sure my car is eligible and if I want to add EAP later I will, just means it wont be added to my lease and be a 30% discount less finance costs.

We will know for sure in just a few days anyway, but for those coming to this thread who may be worried I thought I better clarify exactly what the bill says:

Treasury Laws Amendment (Electric Car Discount) Bill 2022, Schedule 1 — Electric car discount: exemptions from fringe benefits tax

1 At the end of Subdivision A of Division 2 of Part III

Fringe Benefits Tax Assessment Act 1986

Add:

8A Exempt car benefits: cars that are zero or low emissions vehicles

(1) A car benefit is an exempt benefit in relation to a year of tax if:

(a) the benefit is provided in the year of tax in respect of the employment of a current employee; and

(b) the car is a zero or low emissions vehicle when the benefit is provided; and

(c) no amount of luxury car tax (within the meaning of the A New Tax System (Luxury Car Tax) Act 1999) has become payable on a supply (within the meaning of that Act) or importation (within the meaning of that Act) of the car before the benefit is provided.

 

[Priit]

We will know for sure in just a few days anyway, but for those coming to this thread who may be worried I thought I better clarify exactly what the bill says:

There is a little bit more to that legislation. Relevant for me and possible some others is this:

7 Application of amendments
(1) The amendments of the Fringe Benefits Tax Assessment Act 1986 made by this Schedule apply to benefits provided on or after 1 July 2022.
(2) Section 8A of the Fringe Benefits Tax Assessment Act 1986 applies to a car benefit only if the earliest time when a person both held and used the car was at or after the start of 1 July 2022.

meaning the benefit will be back dated to 1 July 2022 to start from and the car cannot be first owned/used before 1 July 2022 to benefit from this.

 

[Erasmuz]

You are absolutely correct, and sorry if I made the situation less clear I should have pasted the whole bill (at least, what I found about it online). Here is the full copy/paste, and here is a link to it if it hasn't been posted already:

https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr6876%22

Treasury Laws Amendment (Electric Car Discount) Bill 2022, Schedule 1 — Electric car discount: exemptions from fringe benefits tax

1 At the end of Subdivision A of Division 2 of Part III

Fringe Benefits Tax Assessment Act 1986

Add:

8A Exempt car benefits: cars that are zero or low emissions vehicles

(1) A car benefit is an exempt benefit in relation to a year of tax if:

(a) the benefit is provided in the year of tax in respect of the employment of a current employee; and

(b) the car is a zero or low emissions vehicle when the benefit is provided; and

(c) no amount of luxury car tax (within the meaning of the A New Tax System (Luxury Car Tax) Act 1999) has become payable on a supply (within the meaning of that Act) or importation (within the meaning of that Act) of the car before the benefit is provided.

(2) A zero or low emissions vehicle is:

(a) a battery electric vehicle; or

(b) a hydrogen fuel cell electric vehicle; or

(c) a plug-in hybrid electric vehicle.

(3) A battery electric vehicle is a motor vehicle that:

(a) uses only an electric motor for propulsion; and

(b) is fitted with neither a fuel cell nor an internal combustion engine.

(4) A hydrogen fuel cell electric vehicle is a motor vehicle that:

(a) uses an electric motor for propulsion; and

(b) is equipped with a fuel cell for converting hydrogen to electricity; and

(c) is not fitted with an internal combustion engine.

(5) A plug-in hybrid electric vehicle is a motor vehicle that:

(a) uses an electric motor for propulsion; and

(b) takes and stores energy from an external source of electricity; and

(c) is fitted with an internal combustion engine for either or both of the following:

(i) the generation of electrical energy;

(ii) propulsion of the vehicle.

2 Subsection 53(1)

Affected Sections

After “subsection 8(2)” insert “or section 8A”.

3 At the end of section 135P

Affected Sections

Add:

Exempt car benefits for zero or low emissions vehicles are included

(3) In working out the employee’s individual fringe benefits amount for the purposes of this section, disregard section 8A (Exempt car benefits: zero or low emissions vehicles).

4 Paragraph 135Q(1)(c)

Affected Sections

Omit “apart from those sections,”, substitute “apart from those sections and section 8A,”.

5 Subsection 135Q(1) (at the end of the note)

Add “Section 8A exempts car benefits for zero or low emissions vehicles.”.

6 Subsection 136(1)

Affected Sections

Insert:

battery electric vehicle has the meaning given by subsection 8A(3).

hydrogen fuel cell electric vehicle has the meaning given by subsection 8A(4).

plug-in hybrid electric vehicle has the meaning given by subsection 8A(5).

zero or low emissions vehicle has the meaning given by subsection 8A(2).

7 Application of amendments

(1) The amendments of the Fringe Benefits Tax Assessment Act 1986 made by this Schedule apply to benefits provided on or after 1 July 2022.

(2) Section 8A of the Fringe Benefits Tax Assessment Act 1986 applies to a car benefit only if the earliest time when a person both held and used the car was at or after the start of 1 July 2022.

I really just wanted to draw attention to the lack of the words "retail value", this appears to have been used in some commentary publication. Otherwise please do your own research All the best future EV owners!

 

[New Tech Bj]

You are absolutely correct, and sorry if I made the situation less clear I should have pasted the whole bill (at least, what I found about it online). Here is the full copy/paste, and here is a link to it if it hasn't been posted already:

https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr6876%22

I really just wanted to draw attention to the lack of the words "retail value", this appears to have been used in some commentary publication. Otherwise please do your own research All the best future EV owners!

I like that some the suggestions mention reimbursing charging infrastructure costs.. that would be great!

 

[slowrise]

I like that some the suggestions mention reimbursing charging infrastructure costs.. that would be great!

I spent some time looking into a novated lease for a new MY, but ended up not going ahead. The issue I saw was that once the lease was set there was no mechanism to adjust the ECM. So even if there is a FBT exemption, you're stuck paying the higher ECM under the lease that you signed.

I think that's because ECM is a way to minimise FBT, it isn't actually the payment of FBT. So if you sign an agreement, it locks in the ECM and I'm told they won't allow you to adjust it.

The only option would be to terminate the lease early and sign a new lease - but there was no clarity as to the break costs.

My conclusion, it's too difficult until the legislation is passed... which is a shame.

 

[Speedst3r]

I think that's because ECM is a way to minimise FBT, it isn't actually the payment of FBT. So if you sign an agreement, it locks in the ECM and I'm told they won't allow you to adjust it.

The only option would be to terminate the lease early and sign a new lease

My understanding is the lease cost is just that - the lease company don't care how you structure the payment, as long as the cost is covered. It's up to your employer's payroll department to put in place your pre-tax deductions and ECM, and changing that should not require a new lease (people adjust their running costs all the time because they end up driving a different amount to what they were quoted).

 

[skyworxx]

If they let you, you can also just do a NL without ECM.

 

[gm12]

What's ECM?

 

[Speedst3r]

What's ECM?

It's a method to offset an employer's FBT liability. Probably best to speak to an accountant/tax professional who can go through it all.

 

[cafz]

It's "Employee Contribution Method". It means you pay some of the lease pre-tax, and some post-tax, usually in order to reduce the FBT liability to zero.

The FBT exemption will allow you to pay the whole lot pre-tax. That's where the saving comes in.

 

[Jusebert]

I'm assuming the report has to be tabled in the Senate before it'll be available on the web. Senate starts at 12pm today

 

[AussieOwner]

Any idea when this will be put to a vote? I havnt seen the motion list for the Senate lately (last time i looked the website hadn't been updated).?

 

[Speedst3r]

I'm assuming the report has to be tabled in the Senate before it'll be available on the web. Senate starts at 12pm today

According to the Senate Order of Business it will be tabled sometime after 5pm AEST. Then debate on it will resume in the House of Reps either later tonight or tomorrow.

 

[Jusebert]

According to the Senate Order of Business it will be tabled sometime after 5pm AEST. Then debate on it will resume in the House of Reps either later tonight or tomorrow.

It is on the house of reps daily program for debate later tonight! It really shouldn't have an issue passing HoR - the Senate is where it needs cross party support which I'm hopeful the Greens will provide

 

[Speedst3r]

the Senate is where it needs cross party support which I'm hopeful the Greens will provide

Greens + 1 more, probably David Pocock.