IN AN OPEN LETTER to the offices of Chris Bowen MP, Catherine King MP, Senator David Pocock and leader of the Greens, Adam Bandt MP, manufacturer of Evnex home EV chargers, has called for a new FBT exemption for the costs of EV home charging stations and related installation expenses.
In the submission, Ed Harvey, CEO of Evnex, points out, “In 2022, the Australian government deployed incentives to encourage employees to buy electric vehicles (EVs) through salary sacrifice, saving significantly on tax. Registration, insurance, repairs or maintenance, and fuel including the cost of electricity to charge electric cars, are all exempt from FBT if they are provided for an eligible vehicle.”
However, the purchase and installation of an EV home charger is considered a fringe benefit item, therefore the employer in effect pays double the value of the charger. Alternatively, the employee pays for the charger out of pocket and not through the salary sacrifice finance arrangement. The result is that there is no tax incentive for owners of salary-packaged electric vehicles to install a home EV charger, leaving more people to rely on public charging infrastructure. Given over 50 percent of EVs are sold through leasing arrangements, this represents a significant impact to EV consumers across Australia, and to EV charger manufacturers such as Evnex.
The letter continues, “Evnex believes there are many shared benefits to making home EV chargers exempt from Fringe Benefit Tax, including:
- Increasing EV adoption
- Accelerating the reduction of transport-related carbon emissions
- Supporting members of the public with peripheral costs of EV ownership
- Making home EV charging more accessible to end customers
- Enabling more low electrical output home EV-charging, reducing strain on the supply network compared to high-output public chargers
Evnex strongly supports the recent efforts of the National Automotive Leasing and Salary Packaging Association (NALSPA), including a private ruling application to the ATO by the National Automotive Leasing and Salary Packaging Association, where it was determined that the current legislation doesn’t allow for the costs of the home charging station and its related installation expenses.
NALSPA subsequently proposed the creation of a new FBT exemption, also addressing where in the existing legislation the new FBT exemption would fit appropriately. Division 13 of Part III of the FBTAA covers “Miscellaneous Exempt Benefits”. Within this Division a great number of fringe benefits are detailed as exempt from FBT. NALSPA’s recommendation is to add a new section for the exemption of the home charging station and its related installation costs within this existing Division.
NALSPA’s suggested draft wording for the new exemption which has recently been provided to Government for their consideration is as follows:
Exempt benefits – provision of home charging stations and related installation expenses
(1) Subject to subsection (2), any of the following benefits provided by an employer in respect of the employment of an employee is an exempt benefit:
(a) an expense payment benefit where the recipient’s expenditure is in respect of a home charging station, its related installation expenses or related subscription costs;
(b) a property benefit where the recipient’s property is a home charging station or related subscription;
(c) a residual benefit where the recipients benefit consists of the use of a home charging station or related subscription.
(2) The benefits referred to in subsection (1) are exempt benefits only where the home charging station is first used in relation to a car benefit provided to the employee, where the car is a zero or low emission vehicle that is an exempt benefit in accordance with section 8A.”
Their suggested definitions for some of the terms used above are:
“home charging station” means a dedicated electric vehicle charging system that is designed and installed specifically and solely to charge electric vehicles using a Mode 3 charger in a residential setting. This system may include:
(a) a Mode 3 AC charger;
(b) a charging cable;
(c) charging software that is required to operate the charger; and
(d) subscription costs for access to the Mode 3 AC charger.
“installation expenses” that are related to a home charging station, may include:
(a) site inspection costs;
(b) circuit protection;
(c) main switch upgrade;
(d) additional switchboard enclosure;
(e) integration of the home charging station circuit with a rooftop solar system;
(f) expenses for capital works required solely to enable delivery of higher electrical output than a standard Level 1 AC power output on a dedicated circuit;
(g) labour costs in respect of the installation; and
do not include:
(b) expenses related to capital or other works that are not required solely to enable delivery of higher electrical output than a standard Level 1 AC power output on a dedicated circuit.
“Mode 3” means Connection of the EV to the a.c. supply network (mains) utilizing dedicated EV supply equipment where the control pilot function extends to control equipment in the EV supply equipment permanently connected to the a.c. supply network (mains).
“Evnex believes that EV home chargers are a critical component of EV ownership and that this can and should be exempt from Fringe Benefits Tax. We urge our Federal Ministers to consider this proposal and would welcome the opportunity to provide further background and context if required.
We extend our thanks to the EV Council and NALSPA for the invaluable work they are doing to enhance salary packaging for EV purchases in Australia.”
It’s hard to argue with the logic of this submission, but it remains to be seen if it results in any significant change to the current legislation.