2024 FBT reminders and updates

The new FBT year is nearly upon us. Here's our helpful key reminders of current exemptions and inclusions, as well as upcoming changes to Fringe Benefits Tax reporting for the new year.

Continued Electric Vehicle Exemptions

EVs purchased since 1 July 2022 continue to be exempt from FBT.

Normally if a business-owned vehicle is used for private use, the employer is liable to pay FBT. However, in the case of an electric vehicle, full exemptions apply if it meets all of the following conditions. The car must be:

  1. A zero or low emissions vehicle
  2. First held and used on or after 1 July 2022
  3. Used by a current employee or their associates (e.g. family members)
  4. One that has never had the luxury car tax paid on it

This is inclusive of EVs provided to employees under a salary packaging arrangement.

Although the vehicle may be exempt from FBT it is still a reportable benefit that may need to be included on the employee’s income statement. Therefore, it's important to still record all costs associated with the car to determine the reportable fringe benefit amount. If the reportable benefit exceeds $2,000 it needs to be reported on an employee’s income statement.

The vehicle must be classified as a car for the exemption to apply; other electric vehicles such as motorcycles, bikes and scooters aren't included. 

It's important to note that:

  • When purchasing second-hand EVs that criteria two and four must still be met but can be hard to verify. Employers should consider this during the purchasing process and do their due diligence to obtain the car's sale history before buying.
  • Plug-in hybrid electric vehicles will not be considered zero or low emission vehicles under FBT law from 1 April 2025.

Employers should consider this during the purchasing process and do their due diligence to obtain the car's sale history before buying.

Don't forget expenses associated with EVs eligible for the above are also exempt from FBT. These include:

If an employer chooses to pay for or reimburse an employee for the costs of purchasing and installing a charging station at the employee’s residence this would not be covered under the exemption and may be subject to FBT.

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Updates To Car Parking Benefits

Changes have been made to FBT car parking benefits and related definitions that could affect you.

As a result of the Taxation Ruling TR 2021/2, updates have recently been made to chapter 16 of the ATO's FBT Guide For Employer regarding car parking fringe benefits.

If you provide parking to your employee or their associate at a work car park, you could be providing them with a car parking benefit that is liable for FBT.

To determine if you are, all of the following must apply to your situation:

  • Your employee or their associate parks a [car] in a [car space] at a [work car park] for a [minimum parking period] between 7am and 7pm
  • The work car park is located at or [in the vicinity of] the employee's [primary place of employment] on that day
  • The car must be:
    • owned by or leased to the employee or their associate
    • made available to the employee or their associate
    • a pool car, or
    • provided to the employee under a salary packaging agreement
  • The employee used the car in connection with travel between their [place of residence] and their primary place of employment on the day the car was parked
  • At least one [commercial parking station] is located within a 1km radius of the work car park
  • The [lowest representative fee] charged to members of the public for [all-day parking] by the commercial parking station is above the car parking threshold rate ($10.40 for the FBT year ending 31 March 2024)
  • The parking is not provided to an employee on a day when they are entitled to use a disabled car parking space and display a valid disabled car parking permit
Definitions provided in the Ruling:

All-day parking

The parking of a car for a minimum of six continuous hours between 7am and 7pm

Car

A motor-powered road vehicle (including a motor car, sports utility vehicle, van or utility, but not a motorcycle) designed to carry a load of less than one tonne and fewer than 9 passengers.

Car space

A space in which a car can reasonably be parked. It does not need to be on bitumen or a paved surface and does not need to be marked as a parking bay.

Commercial parking station

A commercial parking facility which:

  • Is permanent
  • Is not on-street parking
  • Has car spaces available in the ordinary course of business to the public for all-day parking on payment of a fee

This also now includes ‘special purpose’ car parking facilities such as shopping centres, hospitals and airports.

Minimum parking period

A combined parking period of more than four hours.

On-street parking

Parking on a street, road, lane, thoroughfare or footpath paid for by inserting money in a meter or by obtaining a voucher.

Place of residence

A place where a person resides or has sleeping accommodation. This could be a place at which the employee sleeps on a temporary basis, for example, at a hotel or serviced apartment.

Work car park

A business premises or associated premises of the provider where cars are parked in a car space on that day. A work car park does not need to be a commercial parking station and includes an area where pool cars or fleet cars available for employees to use are parked. A business may have multiple locations where car spaces are provided to employees and each is considered to be a work car park.

Loan Fringe Benefit Interest Rate Increase

A loan fringe benefit occurs when you provide a loan to an employee with a low (or no) interest rate during the FBT year.

The ATO considers a low interest rate to be one below the statutory rate of interest. The statutory interest rate for the FBT year ending 31 March 2024 was increased from 4.52% to 7.77%.

If you are charging your employee an interest rate below this, the loan will be liable for FBT.

Changes To Employer FBT Record Keeping

The Treasury Laws Amendment (2022 Measures No. 4) Act 2023 includes an update to the Fringe Benefits Tax Assessment Act 1986. The amendment, aimed at reducing the compliance burden for employers regarding record keeping for FBT, will apply from 1 April 2024.

Under the new law, employers will have a choice to use existing records for certain benefits in place of statutory evidentiary documents, such as travel diaries or employee declarations. This only applies if the Commissioner has made a legislative instrument prescribing the alternative records.

It's important to note that if you choose to use an alternative record for your FBT return, the information you're required to keep remains the same.

If you have any questions about accurate FBT record-keeping or want to understand your tax and reporting obligations, you can reach out to our trusted accounting advisors for personalised advice.

About The Author

Megan is an Associate in Cutcher & Neale’s Specialist Medical Services Division and has over 20 years of industry experience.

Megan is an expert in the taxation field, with a niche specialisation in advising medical professionals.

The information in this publication contains general advice only. It has been prepared without taking your personal objectives, financial situation or needs into account. You should consider whether the information contained within this publication is appropriate for you. Where we refer to a financial product you should obtain the relevant Product Disclosure Statement or offer document and consider it before making any decision about whether to acquire the product.