Did you know going down the electric vehicle route is not only about “going green”, but there are big tax savings to be won. The Prosperity Smart Drive team has partnered with our Tax team to identify a triple-win scenario your business can take advantage of NOW before EOFY 2023, and continue the tax-saving in FY 2024.
Win #1 - FBT saving on zero emission vehicles (ZEVs):
As you would have heard by now, any eligible low or zero emission vehicles purchased and delivered from 1 July 2022, and is under $84,916, can be provided for the private use of employees (including directors) and their associates with zero FBT cost. For business owners, this means you can "treat" your spouse and any other family members working in the business to a new electric or plug-in hybrid car without worrying about the FBT cost. Plug-in hybrid electric vehicles can also take advantage of this measure, but only if acquired before 1 April 2025.
Win #2 -Temporary full expensing on the expenditure:
Until 30 June 2023, any assets that are purchased and ready for use by a business can be claimed in the "last hurrah" for temporary full expensing (TFE) before it expires. This means most businesses can claim up to $64,741 in deduction in the 2023 year for any EVs purchased and delivered by 30 June 2023. Of course, this can also extend to petrol cars, but that's not nearly as exciting as EVs wouldn't you agree? Provided you are able to get delivery before 30 June, this is a major tax advantage before instant asset write-off provisions goes back to a $20,000 cost limit from 1 July 2023.
Win #3 – Save again on tax with EV charging infrastructure:
The ATO has recently clarified that providing free EV charging facility to your employees at your business premise is not subject to FBT - rather silly if it did, imagine paying FBT to let your employees charge their phone at work!
The Government’s newly announced Small Business Energy Incentive, together with the $20,000 instant asset write-off provisions, can be packaged into another win for you! If your business purchase and install EV charging facilities on your business premises from 1 July 2023, not only can get you an immediate tax deduction for the equipment and installation costs if it is under $20,000, you can potentially get another 20% bonus tax deduction (capped at $20,000) by combining it with the installation of a solar system and other energy-efficiency upgrades, or new energy-efficient assets.
On top of all this, you will also be providing a tangible benefit for your employees (and yourself if you bought/buying an EV) without having to worry about FBT. The combination with solar power will mean this benefit essentially costs you nothing beyond the initial capital investment into the equipment.
Other considerations - State government rebate on ZEVs:
Don’t forget that state governments around Australia all offer some form of subsidy for the purchase of eligible vehicles, with both the NSW and QLD governments offering $3,000 rebate on outright purchases, which includes purchases through consumer and commercial finance (but excludes novated lease). This is available to both private individuals as well as businesses.
Further, the generous QLD government also just recently announced an increased the EV rebate to $6,000 for cars costing up to $68,000 cap effective from 1 July 2023, aimed at households with under $180,000 taxable income. This is unfortunately not available to business buyers.
Stamp duty exemptions may also available for vehicles under the relevant thresholds.
Please call our Prosperity Smart Drive team on 1300 761 388 or email smartdrive@prosperity.com.au to discuss how we can help your business heading into end of financial year 2023.
The information provided in this article is for general informational purposes only and should not be construed as investment or business advice. It is important that you seek the advice of a professional advisor who can take into account your individual circumstances before making any investment or business decisions. Any reliance you place on the information provided in this article is therefore strictly at your own risk. The author of this article and the company or platform on which it is hosted disclaim any liability for any financial loss or damage incurred by you as a result of your reliance on any information provided here.
