The ATO has announced an update that may affect businesses and individuals using electric vehicles or plug-in hybrid electric vehicles for work or fleet purposes, where the vehicle is charged at home.
From 1 April 2026 for FBT purposes, and from 1 July 2026 for income tax purposes, the ATO’s standard home-charging electricity rate will increase from 4.20 cents per kilometre to 5.47 cents per kilometre.
This rate is a shortcut method that can be used when a household electricity bill does not separately show how much electricity was used to charge the vehicle.
Instead of tracking kilowatt hours or installing special equipment, the cents-per-kilometre rate can be applied to the number of kilometres travelled to estimate the electricity cost of charging the vehicle at home.
The increase reflects higher electricity costs and may give businesses and individuals a more accurate amount for home-charging expenses.
For employers, the updated rate may affect EVs and PHEVs provided to employees through arrangements such as novated leases, company vehicles or salary packaging.
In practice, the higher rate may affect FBT calculations, employee contributions and reportable fringe benefits amounts.
For individuals claiming work-related car expenses, the new rate can apply from the 2026–27 income year where the logbook method is used. Earlier years continue to use the 4.20 cent rate.
To use the shortcut method, the ATO expects taxpayers to keep basic records, including:
• Odometer readings, ideally at the start and end of each FBT or income year
• A valid logbook showing business and private travel, where required
• At least one electricity bill showing that home electricity costs were incurred
• For PHEVs, petrol receipts, as the petrol and electricity components need to be worked out separately
For example, if an employee uses their own EV and travels 25,000 work-related kilometres in the 2026–27 income year, the estimated home-charging cost would be:
25,000 km × 5.47 cents = $1,367.50
Under the previous 4.20 cent rate, the amount would have been $1,050. This means the updated rate could provide an additional $317.50 in claimable home-charging costs, depending on the taxpayer’s circumstances.
Businesses and individuals should make sure they use the correct rate for the relevant year.
The lower 4.20 cent rate applies for the FBT year ending 31 March 2026 and the income year ending 30 June 2026.
The updated 5.47 cent rate applies from 1 April 2026 for FBT purposes and from 1 July 2026 for income tax purposes.
If you operate a fleet, provide salary-packaged vehicles, or claim work-related car expenses for an EV or PHEV, it may be worth reviewing the impact of the updated rate.
If you have questions or concerns, please do not hesitate to contact our office to speak to one of our team.
