ATO introduces new tax rules for electric vehicle owners

The Australian Taxation Office (ATO) has issued new tax breaks for electric vehicle (EV) owners who use their cars for work.

EV owners who use their cars for work-related purposes are eligible for a tax rebate on their at-home electric charging costs, dubbed the ‘New EV home charging rate’.

The flat rate introduced by the ATO was intended to make the process easier to manage.  If your EV is charged exclusively at home, you can use the rate of 4.20 cents per kilometre driven.

Conditions to claim this flat rate

The ATO stated that there are a few circumstances which allow for an EV owner to claim this flat rate, including:
– Use a zero-emissions electric car for gaining or producing assessable income,
– incur electricity expenses when charging their vehicle at home, and
– have kept the relevant records for the income year.

The ATO stated that if you choose this method you “can’t include commercial charging station costs” unless you can “accurately determine the percentage of the vehicle’s total charge based on the type of charging location”.

“If [your car] does not have that functionality, you need to choose between using the EV home charging rate and commercial charging station costs,” Chartered Accountants ANZ Senior Tax Advocate, Susan Franks, said in a statement. Ms Franks also advised to keep a logbook and receipts in case the ATO asks for proof.

If you don’t have odometer records from the beginning of the 2022-23 or 2023-2024 financial year, you are permitted to use a “reasonable estimate of your service records, logbooks or other available information”.

Despite the new flat rate, EV owners can opt to calculate the electricity value by determining the actual cost incurred instead of using the ATO’s guideline.

The flat rate only applies to zero-emission cars such as EVs and hydrogen-powered cars. It does not apply to plug-in hybrids, electric motorcycles and electric scooter owners.

Deductions for non-EV owners

For work-related car expenses using the cents per kilometre method, the ATO has advised that the rate has increased for the 2023-24 financial year to 85c per kilometre.

“The cents per kilometre rate is an all-inclusive rate and covers all of your eligible car expenses including registration, insurance, repairs, maintenance, fuel, and decline in value,” the ATO said.

“You can’t claim a deduction for these costs separately, elsewhere in your return.”