The transition to electric vehicles (EVs) is rapidly changing the landscape for fleet management in Australia. While businesses are reaping benefits like reduced operational costs and environmental impact, a crucial aspect to consider is how this shift affects Fringe Benefits Tax (FBT). In this post, we will explore the impact of EVs on FBT and how fleet managers can leverage this transition effectively while managing assets, optimizing their fleet servicing, and using vehicle fleet software.
What is FBT?
Fringe Benefits Tax is a tax employers pay on certain non-salary benefits provided to employees, including the private use of company vehicles. Typically, FBT is calculated based on the value of the vehicle, usage, and related expenses, such as fuel, maintenance, and insurance of the vehicle. For businesses transitioning to electric vehicles, the Australian government has introduced significant FBT exemptions that can lead to major cost savings.
EVs and the FBT Exemption in Australia
As of 2022, certain electric vehicles are exempt from FBT under specific conditions. To qualify for the FBT exemption, the electric vehicle must:
Be a zero-emission vehicle, which includes fully electric or hydrogen-powered vehicles (plug-in hybrids are excluded).
Fall under the luxury car tax threshold for fuel-efficient vehicles, currently set at $89,332 for the 2023-24 financial year.
Be first used on or after 1 July 2022.
How EV FBT Exemptions Benefit Fleet Management
1. Reduced FBT Liability
One of the key advantages of transitioning to EVs is the reduced tax burden on businesses. Traditionally, company vehicles attract a high FBT liability due to their private use by employees. However, electric vehicles that meet the exemption criteria can dramatically lower or eliminate this liability, leading to substantial savings on both tax and operational costs, such as fleet maintenance and insurance of the vehicle.
2. Incorporating Fleet Management Software
Managing a fleet of electric vehicles can be challenging, but fleet management software, such as that provided by Figtree Systems, make it easier to optimize fleet operations. Fleet management software helps in tracking vehicle usage, scheduling servicing, and monitoring costs related to energy consumption. By using advanced fleet management software, fleet managers can better manage assets and ensure compliance with tax regulations.
3. Improved Fleet Servicing and Maintenance Management
Electric vehicles require different servicing schedules compared to traditional internal combustion engine vehicles. Fleet management software can be integrated with maintenance management systems to automate fleet maintenance and service schedules, ensuring the longevity of vehicles and reducing downtime. This includes tracking battery health, monitoring energy consumption, and predictive maintenance based on vehicle data. Moreover, keeping track of the insurance of the vehicle and other associated expenses becomes easier with these systems in place.
4. Sustainability and Enterprise Asset Management
Transitioning to EVs also aligns with broader sustainability goals. Many businesses are incorporating enterprise asset management (EAM) to track and manage their fleets’ overall performance, environmental impact, and lifecycle costs. An EAM system, when combined with fleet management software, helps businesses assess the environmental and financial benefits of using EVs and ensures their fleet is contributing to corporate sustainability targets.
Key Considerations for Fleet Managers
To fully benefit from the FBT exemptions, fleet managers must ensure they are selecting eligible electric vehicles, keeping detailed records, and using the right tools to monitor vehicle usage and costs. Some points to consider include:
Choosing Eligible EV Models: Not all EVs are exempt from FBT. Ensure the vehicle models selected meet the government's criteria for FBT exemption.
Record Keeping: Even with an FBT exemption, accurate record-keeping of vehicle use, expenses, and servicing is essential to ensure compliance and maximize tax savings.
Integrating Maintenance Management Systems: Implementing a maintenance management system, such as included with Figtree Systems fleet management software helps track repairs, parts replacements, and other routine servicing for EVs. These systems ensure that fleet maintenance is managed efficiently, especially as EVs may have different servicing requirements than traditional vehicles.
Conclusion
The shift towards electric vehicles is a smart move for businesses looking to reduce their FBT liability and operational costs. By leveraging FBT exemptions, incorporating fleet management software, and focusing on sustainability through enterprise asset management, fleet managers can optimize both their financial and environmental outcomes. With proper planning, the transition to electric vehicles can lead to long-term benefits, helping businesses manage their assets efficiently and contribute to a more sustainable future. For further information on fleet management software solutions, contact Figtree Systems.