The ATO acknowledges that individuals who incur work-related expenses relating to vehicles and employers with FBT obligations might be faced with significant compliance challenges of trying to calculate the cost of electricity that is used in charging an electric vehicle at residential premises. The ATO has issued a draft PCG which is aimed at addressing this challenge.
If the employer or individual is able to satisfy some basic eligibility conditions, they can choose to calculate the electricity costs associated with charging an electric vehicle at a residential home by multiplying the total number of relevant kilometres travelled by the vehicle in the FBT year or income year by the EV home charging rate, which is initially set at 4.20 cents per kilometre.
The guideline will apply from:
For FBT purposes, from 1 April 2022;
For income tax purposes, from 1 July 2022.
It is not possible to use the guideline if the vehicle is a plug-in hybrid vehicle that has an internal combustion engine.
The record keeping requirements for those who want to use the EV home charging rate are summarised below:
The taxpayer needs to keep a record of the distance travelled by the car during the relevant year, using odometer records;
If the rate is being used for FBT purposes under the operating costs method, a valid log book is required;
If the rate is being used by an individual to calculate deductions for a car using the logbook method, a valid log book is required and the individual needs one electricity bill for their residential premises in the relevant year to show they incurred electricity costs;
If the rate is being used by an individual to calculate deductions for a vehicle that is not a car, the ATO recommends keeping a log book as well as an electricity bill.
A transitional approach is available if odometer records have not been maintained as at 1 April 2022 or 1 July 2022. In this case a reasonable estimate can be used based on service records, log books or other available information.
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