Australian drivers who use their electric vehicles for work-related purposes can benefit from new tax breaks on their home charging costs, Yahoo Finance reported.
ATO’s new tax subsidy
The Australian Tax Office (ATO) recently announced new tax breaks for people who rely on their battery-electric vehicle models for work purposes.
The “New EV home charging rate” subsidy basically offers eligible BEV owners a fixed rate of 4.20 cents ($0.042) per kilometer to determine the estimated electricity consumption cost of their home chargers.
The charging cost equates to the total kilometer traveled by the electric vehicle for work purposes multiplied by the $0.042c set rate. In this sense, if an eligible owner has traveled 12,000 kilometers for work in the 2023-2024 Financial Year, they can benefit from an electric charging claim of $504 (12,000 x 0.042).
An unnamed ATO spokesperson further explained the newly released tax subsidy.
“The cost of a home electric charger would likely be a capital, depreciating asset. This means you may be able to claim a deduction for the decline in value of the depreciating asset each year over its effective life. However, this deduction must be reduced by the extent to which the asset is used for private purposes. “It’s unlikely you could claim a deduction for the full cost of the charger when it’s purchased.”
ATO spokesperson (via Drive)
How to qualify?
The ATO has outlined the key requirements for EV owners to qualify for the new tax breaks, including the following:
- own a zero-emissions electric vehicle for gaining or producing assessable income
- incur electricity expenses when charging electric vehicles at home, and
- have kept the relevant records for the financial year
The office has warned that owners who choose this method cannot “include commercial charging station costs” unless they can “accurately determine the percentage of the vehicle’s total charge based on the type of charging location.”
EV owners who do not possess home chargers can apply for the costs of commercial charging stations, as explained by Chartered Accountants ANZ Senior Tax Advocate Susan Franks.
Incentive application
ATO’s official website indicates that Australian employers can use the tax subsidy’s set rate for their Fringe Benefits Tax (FBT) reports.
On the other hand, employees can apply this fixed rate to their income tax reports. However, it must be noted that employees seeking to benefit from this new subsidy must employ the logbook method to calculate the percentage of the electric vehicle’s operation for work-related purposes.
That said, it is crucial for owners to always maintain a logbook and receipts to ensure their claim to the tax breaks. Owners who do not have odometer records from the start of the 2022–23 or 2023–24 income or fringe benefits tax (FBT) year can utilize their “reasonable estimate of your service records, logbooks, or other available information.”
Unfortunately, this new electric vehicle subsidy only applies to zero-emission electric cars, excluding plug-in hybrid vehicles, electric motorcycles, and electric scooters.
