Federal Budget 2022/23 – Businesses
Exemption from Fringe Benefits Tax (FBT) for electric vehicles from 1 July 2022. To qualify for the exemption, the electric vehicle must not have been held or used prior to 1 July 2022.The exemption will only apply to car’s with a value, at their first retail sale, under the luxury car limit. This is $84,916 for FY2023. The vehicle must be a ‘zero or low emissions vehicle’, which includes battery EVs, Hydrogen Fuel Cell EVs and Plug in Hybrid EV to qualify.
Where this is utilised with the Temporary Full Expensing Measure allowing 100% depreciation, up to the car limit, this could be very tax efficient for businesses However, this TFE concession is due to cease on 30 June 2023 and no extension of this was included in this Budget announcement.
The FBT exemption ultimately provides an opportunity for individuals to purchase an electric vehicle under a salary sacrifice novated lease arrangement. Along with the FBT savings, consumers of electric vehicle will also benefit from the removal of a 5% import tariff.
Extension of the ATO Compliance Programs
The ATO Tax Avoidance Taskforce will receive additional funding and be extended to 30 June 2026 supporting a broadening of priority areas of observed business tax risks, complementing the ongoing focus on multinational enterprises and large public and private businesses.
The taskforce received funding in 2016 for an initial 4-year period to enhance then current compliance activities targeting large multinationals, private groups and high-wealth individuals, extending them to 30 June 2020.
Fuel tax credits — heavy vehicle road user charge increased
The Heavy Vehicle Road User Charge rate has been increased from 26.4 cents per litre to 27.2 cents per litre of diesel fuel, effective from 29 September 2022. The increased rate will coincide with an increase in the fuel excise tax credit to 18.8 cents per litre that will offset the impact for heavy vehicle users.
There were announcements relating to international tax and multinationals. In general the objectives of these changes are to enhance tax transparency between countries and reduce the opportunities for multinationals to transfer profits from Australian companies to low tax jurisdictions.