The ATO has released a draft compliance guideline to address the compliance challenges faced by taxpayers in relation to separately identifying home charging costs for electric vehicles (EVs) from the total electricity consumption of a household.
It sets out a proposed method that calculates the cost of electricity when an EV is charged at an employee’s or an individual’s home. Taxpayers may choose to apply a rate of 4.20 cents per kilometre travelled in an FBT or income year.
Fringe benefits tax
If an employer provides an employee or associate with an EV that lead to the provision of car, residual or expense payment benefits, as per this draft guideline, the employer will have the option to use the shortcut method (ie a rate of 4.20 cents per kilometre travelled) to calculate taxable value of such benefits.
Income tax deductions
The shortcut method of 4.20 cents per kilometre travelled can also be used by an individual taxpayer to calculate work-related car expenses for income tax purposes when using the logbook method.
For a motor vehicle which is not a car, a deduction may also be claimed by calculating the total kilometres travelled by the vehicle during an income year and then multiplying by the 4.20 cents per kilometre rate.
Eligibility for making a claim
To be eligible to apply this method, yearly odometer readings, logbooks and at least one electricity bill must be maintained/obtained.
An estimate of kilometres travelled in the 2022–23 FBT year and income year may be used if odometer records were not kept at 1 April or 1 July 2022. This transitional rule will not be available in subsequent years.
If you are an employer and using the operating cost method for FBT, a valid logbook and yearly odometer readings must be maintained for the EV.
If you are an individual, you must maintain a valid logbook and one electricity bill to support your claims.
Adopting this methodology is optional, and a taxpayer may choose to opt-out/opt-in on a yearly basis.
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Please note that this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for advice specific to you and your circumstances.