Electric vehicles (EVs) are becoming more popular in Australia. They’re better for the environment and can help businesses save money. However, if you're an employer, it's important to understand how the Fringe Benefits Tax (FBT) applies when you provide EVs or EV charging to your staff.
This article explains the key points about FBT and EVs in simple terms.
What is Fringe Benefits Tax (FBT)?
FBT is a tax that employers pay when they give extra benefits to employees—things like cars, parking, or memberships—on top of their regular pay. FBT is separate from income tax and is calculated each year from 1 April to 31 March.
When EVs are exempt from FBT
Some EVs are exempt from FBT, which means employers don’t have to pay tax on them. To qualify, the vehicle must:
- be a battery electric vehicle (BEV), plug-in hybrid (PHEV), or hydrogen fuel cell car
- carry fewer than 9 people and less than 1 tonne of load
- have been ‘held and used for the first time’ on or after 1 July 2022
- cost less than the Luxury Car Tax (LCT) threshold when first sold.
Important: Effective 1 April 2025, new plug-in hybrids are no longer exempt from FBT. But if the car was already in use before 31 March 2025, the exemption still applies.
Charging EVs and FBT
FBT rules also apply to how and where EVs are charged.
Charging at work or in public
If employees charge their EVs at work or use public charging stations (including cards or memberships), this is considered a car expense and is exempt from FBT.
Charging at home
Charging at home is a bit more complex. FBT implications and considerations are split between:
- electricity used to charge the EV, and
- installation of home EV charging infrastructure.
Electricity used at home to charge an EV is considered a car expense and exempt from FBT.
Home charging equipment may or may not be exempt.
- If the charger costs less than $300, it’s usually exempt.
- If it costs more than $300, FBT may apply depending on how it’s paid for:
- If the employer installs it, it’s a property fringe benefit.
- If the employee installs it and gets reimbursed, it’s an expense payment fringe benefit.
- If it’s part of a lease or Charging as a Service (CaaS) arrangement, the cost must be separated and treated accordingly.
What employees need to know
Even if EVs and charging are exempt from FBT, they may still be reportable fringe benefits if the value is over $2,000 per year. This amount will show up on your income statement and could affect means-tested support, like:
- Medicare Levy Surcharge
- Tax offsets
- Family assistance or Centrelink payments.
For example, an $85,000 EV could add $32,000 to your reportable fringe benefits.
Final tips for employers
EVs can help your business save money and reduce emissions. To help make the most of FBT exemptions:
- Check the star rating of vehicles to find battery electric vehicles (BEVs) that meet your needs and discover what you can save. (Note: VESR does not include the vehicle's purchase price, so ensure you also check that the purchase price is under the current Luxury Car Tax (LCT) threshold).
- Keep good records relating to usage and public charging costs to help with compliance.
- Use simple methods like the EV home charging rate to make cost management easier.
- Understand how reportable fringe benefits can impact your staff and communicate this with them.
Following the rules from the Australian Tax Office (ATO) helps you stay compliant and get the most out of your EV investment.
More information
For more help, talk to a registered tax professional or visit:
Disclaimer: This article is for general information only and is current as of October 2025. Always check with a tax expert to make sure you’re following the latest laws.