The tax office’s home charging shortcut went up 30 per cent, to 5.47 cents a kilometre

Working out how much electricity a car took out of a house is genuinely hard. Unless the charger is separately metered, the car’s consumption is mixed in with the fridge, the hot water and everything else on the same bill. The ATO’s answer is Practical Compliance Guideline PCG 2024/2, which sets a cents-per-kilometre figure you can multiply by the kilometres driven instead of proving the actual cost.

What changed

Table 2 of the Guideline now carries two rates rather than one. The original 4.20 cents per kilometre applies to fringe benefits tax years and income years commencing on and after 1 April 2022. A second row sets 5.47 cents per kilometre for years commencing on and after 1 April 2026. We are quoting the figures rather than the table itself, for a reason set out in the methodology note below.

It is a safe harbour, not an entitlement

This is the part most summaries lose. The Guideline does not say the rate is what your electricity costs. It says the Commissioner would not have cause to apply compliance resources to review your calculation of electricity costs of charging an electric vehicle at a residential premises if you use it. That is a promise about audit attention, not a valuation. You are free to work out and claim your actual cost instead, and the Guideline exists precisely because most people cannot.

The dates it reaches back to differ by tax. For electric vehicles the Guideline applies for FBT purposes, from 1 April 2022 and for income tax purposes, from 1 July 2022. For plug-in hybrids it starts two years later, 1 April 2024 for FBT and 1 July 2024 for income tax.

Public charging is not in it

The shortcut is for electricity bought at home, and the Guideline is explicit that the kilometres have to be cut down to match. Where the split can be established, it says, The total number of relevant kilometres used to calculate home charging costs must be adjusted by applying the home charging percentage to arrive at the relevant kilometres for the purpose of this Guideline. A car that reports what share of its charge came from home, which many now do, makes that a reading rather than an estimate. Commercial charging is accounted for separately, on its receipts.

Whether 5.47 cents actually covers it

A cents-per-kilometre rate is a statement about two things at once: the price of electricity and how much the car uses. The published rate fixes the product of the two, so the useful question for a household is at what point it stops covering the real cost. That is arithmetic on the ATO figure and the price on your own bill, and it is ours rather than the ATO’s.

Break-even consumption, being the ATO rate divided by the price you pay, expressed per 100km. Our arithmetic on the published rate, with no assumption about what any particular car uses or what any particular household pays. Read your own usage rate off your bill and find the row.

Read down that table and the shape of the change is clear. At a flat retail tariff around 30 to 40 cents, the old 4.20 cents only covered a car doing better than roughly 10.5 to 14 kilowatt hours per 100km, which is thriftier than most electric cars manage in ordinary use. At 5.47 cents the same tariffs cover 13.7 to 18.2, which is a much more ordinary range. The rate has moved from stingy to roughly fair for someone charging on a standard tariff.

For anyone charging deliberately, it is now better than fair. A household filling the car from its own rooftop solar, or on an overnight or dedicated electric-vehicle plan, is paying a long way below a flat retail rate, and every cent of that gap is a cent the shortcut pays that the electricity did not cost. That is not a loophole. It is the ordinary consequence of a single national rate meeting a market where the price of a kilowatt hour at home varies by a factor of several depending on when and how you buy it. The people who have done the most to shift their charging into cheap hours are the people the flat rate now suits best.

Plug-in hybrids get the hard version

There is no equivalent shortcut for a plug-in hybrid, because a PHEV takes both petrol and electricity and the Guideline has to separate them. Its method runs to seven steps: actual petrol costs for the year, the quantity of petrol bought, the kilometres that petrol covered, total annual kilometres, the kilometres left over as electric, the electricity cost, and then total fuel expenses. Anyone who has kept a logbook will recognise the shape of the year that implies.

PHEV drivers have a second thing to check, and it is the bigger one. On the fringe benefits tax exemption for electric cars, the ATO states that from 1 April 2025 a plug-in hybrid electric vehicle will not be considered a zero or low emissions vehicle under FBT law and is no longer eligible for the exemption, though the exemption can continue to be applied in certain conditions. If a novated lease was arranged around a PHEV on the assumption that the exemption ran indefinitely, that assumption expired.

The bigger number sitting behind all of this

The charging rate is small change next to the exemption it sits under. For an eligible electric car the ATO’s position is that The private use of an eligible electric car, and the cost of fuel (including electricity) to charge it is exempt from FBT, with benefits provided under a salary packaging arrangement included, though the benefit remains reportable. That exemption is the reason a novated-leased electric car can cost meaningfully less than the same car bought outright, and it is what makes the cents-per-kilometre figure worth getting right at all.

It also has a clock on it. The same ATO page states that The government will complete a review into this exemption by mid-2027 to consider electric car take-up. No terms of reference, no start date, and the page says only that it will provide an update when the review begins. So anyone signing a novated lease that runs past the middle of 2027 is signing into a tax treatment with a scheduled review attached to it.

Whether anything further is already written into law for later years is a question we could not settle today, and we would rather say so than repeat a figure we cannot show you. The ATO’s own page mentions no threshold, no cap and no date beyond the review, and the Federal Register of Legislation serves the amending Act through a viewer that did not render for us in either a plain fetch or a real browser. The one later-year change that is settled and on the record is the plug-in hybrid one above, from 1 April 2025. We will follow the review when it opens, and go back for the legislation by another route.