The ATO has released the final version of guidance outlining a method to calculate home electricity costs for PHEVs, supplementing the existing 4.2 cents per kilometre rate for fully electric vehicles.
The method involves tracking odometer readings, petrol usage, and applying a step-by-step calculation to estimate electricity kilometres and associated costs.
While optional, this method may be useful for completing FBT returns or claiming income tax deductions.
The long-awaited guidance from the ATO on a simple method for determining the home charging cost of electricity for plug-in hybrid vehicles (PHEVs) has now been finalised.
This comes in the form of an update to Practical Compliance Guideline PCG 2024/2, which has provided a simple rate for the cost of electricity for fully electric vehicles (EVs) of 4.2 cents per kilometre, able to be used for fringe benefits tax (FBT) and income tax purposes for the last couple of years. This rate for EVs remains unchanged.
At first glance, the option presented for PHEVs is not so simple. But often, simpler alternatives tend to make fairly big assumptions that won’t be realistic in many cases.
The option presented for PHEVs is first available for the 2024/25 FBT year or income tax year and involves:
Keeping odometer records at the beginning and end of each year (with some leniency around this for the start of the 2024/25 year, allowing a reasonable estimate based on other records);
Keeping a record of petrol costs;
Obtaining a published average petrol rate (price per litre of petrol) for the period, such as from the Australian Institute of Petroleum’s AIP Annual Retail Price Data; and
Obtaining the car’s petrol consumption rate from the manufacturer – being the Condition B test cycle fuel economy figure, akin to the vehicle’s consumption rate in standard hybrid driving mode.
The steps for the calculation are:
Step 1. Actual petrol costs for the year From records
Step 2. Litres of petrol consumed Actual petrol costs (step 1) divided by Average petrol rate (from the AIP)
Step 3. Total petrol kilometres Litres of petrol consumed (step 2) divided by Petrol consumption rate (from the manufacturer)
Step 4. Total kilometres travelled From odometer records
Step 5. Total electricity kilometres Total kilometres travelled (step 4) less Total petrol kilometres (step 3)
Step 6. Total electricity cost Total electricity kilometres (step 5) multiplied by EV home charging rate (currently 4.2 c/km)
Step 7. Total fuel expenses Actual petrol costs (step 1) plus Total electricity cost (step 6)
This methodology is optional. If you have a smart charger or other technology that tracks the actual amount your car is charging at home, then you can use that information instead, to determine your actual electricity costs.
The PCG also contemplates the option of using smart charger information to determine the percentage of total kilometres charged at home (the step 5 amount).
Outside of the PCG, it might be possible to determine the amount of power used for charging your car and your actual cost of this power. Note that peak and off-peak rates, along with a contribution from solar panels may make determining the actual cost tricky – hence the need for this option from the ATO.
With the 30 April 2026 registration deadline approaching, companies that performed R&D activities in the year ended 30 June 2025 should be reviewing eligibility, documentation and governance now to preserve their entitlement under the RDTI.
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