Guidelines for Calculating Electric Vehicle Home Charging Costs
The Australian Taxation Office (ATO) has recently published draft guidelines outlining a methodology for determining the cost of electricity used when charging an electric vehicle (EV), at an individual’s or employee’s home. These draft guidelines apply to employers and individuals who meet the criteria for Fringe Benefits Tax (FBT) and income tax purposes, as outlined in the guidelines.
For the FBT or income year commencing on or after 1 April 2022, the rate applicable is 4.2 cents per kilometre, referred to as the “EV home charging rate.” This rate is multiplied by the total number of kilometres travelled by the EV during the relevant income or FBT year.
In cases where EV charging expenses are incurred at a commercial charging station, a decision must be made:
- If the EV home charging rate is used, the cost at the commercial charging station should be disregarded.
- The EV home charging methodology cannot be applied if the commercial charging station cost is considered.
Maintaining all necessary records, such as receipts, to substantiate the claim, and following the standard record-keeping rules, is essential.
Suppose an individual wishes to use the EV home charging rate to calculate their electricity charging expenses. In that case, they must maintain records of the distance travelled by the vehicle (typically through odometer records) within the applicable FBT year until 31 March or the income year until 30 June.
In cases where an employer chooses to apply the draft guidelines and the EV home charging rate for FBT purposes, a valid logbook must be maintained if the operating cost method is used.
For individuals opting to apply the draft guidelines and the EV home charging rate for income tax purposes, they need to satisfy the record-keeping requirements by having the following:
- A valid logbook to utilise the logbook method for calculating work-related car expenses (it is recommended to maintain a record to demonstrate work-related vehicle usage regardless).
- At least one electricity bill for the residential premises in the relevant income year, to confirm the incurrence of electricity costs.
It is important to note that these draft guidelines only apply to zero-emissions vehicles. Therefore, they cannot be relied upon, and the EV home charging rate cannot be used for vehicles such as plug-in hybrids with an internal combustion engine.