Ask Ban Tacs Question
Hi Julia
Given you wrote about this Bill in August, I assume you’ll be addressing it more in further detail, however we have a specific question about our situation.
We own a small business (a service business trading as a Pty Ltd company) and we are wanting to purchase an electric vehicle. The car will be entirely for personal use, and so FBT would normally be payable. I understand that the Electric Car Discount Bill has now passed. Everything I read about how the new laws work discusses this from the perspective of an employee using a salary packaging arrangement.
Given that we have a business, we’d obviously like to utilise pre-tax dollars, and gain the instant asset write-off by purchasing it prior to the end of this financial year. To minimise the total cost of the car, we’d like to purchase the electric vehicle through the business, buying it outright, without the use of financing. As such, my question is: for small business owners who get their company to purchase an electric vehicle for private use, will this be exempt from FBT? I should also note that the car will be under the luxury car tax threshold of $84,916, and would need to be in use prior to the end of the financial year to claim the write-off. If there’s anything else I need to be mindful of, I’d be keen to hear it.
Thanks,
Matthew
Answer
I understand wanting to dot your I’s and cross your t’s on this as it is a great incentive. You sound like the perfect situation, a salary packaging arrangement is certainly not necessary and is just an extra burden. No need for a novated lease better for the company to buy it so you get the immediate write off. I wasn’t planning to write another blog as it got through parliament as expected except that I was wrong to suspect they would delay its introduction until the start of the FBT year. So even better. The blog was updated with an extra page when the bill was put before parliament https://bantacs.com.au/Jblog/when-to-buy-an-ev/#more-1042
Here is a checklist of things you haven’t mentioned so I just want to be sure:
Make sure you are an employee of your company
Make sure that your company needs a tax deduction of such a large amount otherwise your Accountant needs to work out how to juggle your circumstances to avoid the immediate write off. For example avoid purchasing until July when immediate write off no longer applies or choose not to participate in the immediate write off for any of the assets you buy this year.
Things that I like the sound of in your question, so please don’t change without consultation:
You are buying a car not a vehicle designed to carry goods or more than 9 people
The value of the car will be below the luxury car tax threshold ($84,916 in 2022-23) for fuel efficient vehicles. The luxury car tax threshold generally includes GST and customs duty but excludes other items such as service plans, extended warranties, stamp duty and registration.
Will be installed ready for use before 30th June, 2023. The FBT concessions will apply regardless, it is just a case of whether you get an immediate full tax deduction or depreciate it over 8 years. It is the same amount claimed, it just takes longer.
It all looks good but please run this past your Accountant in case there is something particular about your circumstances that I am not aware of.
Good luck getting the car before 30th June, 2023
