Electric Car Discount: Who Qualifies and What You Get
Learn how employees can avoid certain taxes when using salary sacrifice to purchase an electric vehicle.
This scheme allows employees to pay for an electric vehicle using a portion of their pre-tax salary without being taxed for the benefit.
Who it's for
This scheme is specifically designed for employees who are looking to pay for an electric vehicle through a salary sacrifice arrangement. This means you work with your employer to pay for the vehicle using part of your gross salary before tax is calculated. If you are an employee looking to integrate an electric vehicle into your existing salary structure, you may be eligible for this tax benefit.
What you get
The primary benefit of this scheme is an exemption from Fringe Benefits Tax (FBT). Usually, when an employer provides a benefit to an employee—such as a car—the employer must pay a specific type of tax known as Fringe Benefits Tax. However, under this arrangement, you receive an FBT exemption on your electric vehicle, which can make owning a new electric car more affordable through your salary sacrifice setup.
What it costs you
There is no direct government fee to access this discount, but there are practical requirements to consider. To make this work, you must have an agreement with your employer. You cannot access this benefit independently; your employer must agree to participate in the salary sacrifice arrangement and manage the necessary payroll adjustments to facilitate the benefit.
The catch to know
The most important thing to keep in mind is the price limit. This tax exemption does not apply to every electric vehicle on the market. It only applies to vehicles that fall under the luxury car tax threshold. If the electric vehicle you are looking to salary sacrifice is valued above this specific government threshold, you will not be able to claim the exemption.
How to apply
- Confirm with your employer that they are willing to participate in a salary sacrifice arrangement for a vehicle.
- Research electric vehicles and ensure the chosen model falls under the luxury car tax threshold.
- Work with your employer's payroll or finance department to set up the pre-tax salary deductions.
- Check the official portal for any specific documentation your employer might need to process the exemption.