IS YOUR TAX ELECTRIFIED?
The last Federal election was a battle of who could show who would be greener. The Labour Party won and gave businesses an excellent incentive for their next motor vehicle purchase to be an electric vehicle.
With this in mind, I have to change my stance on the advice I have given over the last 30 years about purchasing a vehicle in the company name if there is high private usage. The tax benefits are as outlined below:
- Fringe Benefits Tax (FBT) exemption for electric motor vehicles purchased from 1 July 2022 also applies to second-hand electric cars if the car’s original value was below $84,916.
- The value of the vehicle must be below the luxury car tax threshold. This value is higher than the usual amount for engine vehicles at $84,916. There are special rules that apply to this.
- The company can claim back the GST
- The company gets a tax deduction for the cost and running costs of the vehicle up to the normal cost price depreciation limit of $64,741.
Now for the bad news. This law is in place for three years. It will be reviewed then, so it may not be around forever.
There are also some FBT reporting requirements in that it will form part of the employee’s reportable fringe benefits amount. Therefore, FBT calculations will be required.
Suppose you are considering updating a company vehicle or looking at a car privately and having a company. In that case, this may be an opportune time to think of an electric vehicle and save tax simultaneously.
If you have any questions, please contact Mark or the team at firstname.lastname@example.org or 9923 2959.
“This is general advice only and not to be interpreted as individual advice specific to your situation. Contact us to discuss the best solutions for your needs.”