ATO Updates EV Home Charging Rate: What It Means for Businesses and Individuals
The Australian Taxation Office (ATO) has announced an important update for taxpayers using electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) for work or business purposes where charging occurs at home.
From 1 April 2026 for Fringe Benefits Tax (FBT) purposes, and from 1 July 2026 for income tax purposes, the ATO’s approved home-charging electricity rate will increase from 4.20 cents per kilometre to 5.47 cents per kilometre.
This updated rate reflects rising electricity costs and provides a more realistic allowance for the cost of charging EVs at home, while continuing to offer a simple and practical compliance method for taxpayers.
What is the ATO home-charging rate?
The ATO’s cents-per-kilometre home-charging rate provides a simplified method for calculating electricity costs relating to EV charging at home.
Rather than tracking exact electricity usage, recording kilowatt hours, or installing dedicated charging meters, taxpayers can simply apply the ATO-approved rate to the number of kilometres travelled by the vehicle.
This approach significantly reduces record-keeping requirements while still allowing taxpayers to claim a reasonable estimate of electricity expenses.
What this means for employers
Businesses providing EVs or PHEVs to employees through arrangements such as:
- company vehicles,
- novated leases, or
- salary packaging arrangements,
may be impacted by the updated rate.
The higher home-charging rate increases the electricity cost component attributed to the vehicle and may affect FBT calculations in several ways, including:
- increasing the taxable value of the benefit under the operating cost method,
- increasing employee recipient contributions, which may reduce the employer’s FBT liability, and
- impacting reportable fringe benefits amounts.
Businesses with EV fleets or employee vehicle arrangements should review their current FBT calculations to ensure the updated rates are applied correctly from the relevant commencement dates.
Individuals claiming work-related vehicle expenses
Individuals using the logbook method to claim work-related car expenses can apply the new 5.47 cents per kilometre rate to the business-use portion of kilometres travelled from FY2026–27 onwards.
The previous 4.20 cents per kilometre rate will continue to apply for earlier years, including claims back to the 2022 income year.
Record-keeping requirements
The ATO’s guideline remains relatively straightforward, with only basic records generally required, including:
- odometer readings at the start and end of the FBT or income year,
- a valid logbook where required under the operating cost or logbook method,
- at least one household electricity bill showing that home electricity costs are incurred, and
- for PHEVs, petrol receipts and supporting calculations for the fuel component.
Importantly, for PHEVs, the petrol and electricity components must be calculated separately. The ATO home-charging rate can only be applied to the electric portion of travel, while petrol usage must be calculated using the manufacturer’s hybrid fuel consumption figures.
Technology may help improve accuracy
Many newer EVs now provide detailed reporting on charging activity, including the proportion of charging completed at home compared to public charging stations.
Using this information can improve the accuracy of claims and may potentially increase deductible amounts where home charging forms a significant portion of vehicle usage.
Example calculation
An employee using their personally owned EV for work drives 25,000 kilometres during FY2026–27.
Using the updated rate:
Home charging cost = 25,000 km × 5.47 cents = $1,367.50
Under the previous rate, the claim would have been $1,050.
The updated rate therefore increases the allowable claim by $317.50, which may help reduce the employee’s taxable income for the year.
What you should do now
To ensure compliance and maximise available tax benefits:
- continue using the existing 4.20 cents per kilometre rate for the FBT year ending 31 March 2026 and for the income year ending 30 June 2026, and
- apply the updated 5.47 cents per kilometre rate for the current FBT year and from FY2026–27 onwards.
Final thoughts
As EV adoption continues to accelerate across Australia, the updated ATO home-charging rate provides a practical and taxpayer-friendly way to recognise rising electricity costs while keeping compliance manageable.
Whether you operate an EV fleet, provide salary packaging arrangements, or claim work-related car expenses personally, now is a good time to review the potential tax impact of these changes.
Our team at Bates Cosgrave can help you assess your position, review your calculations and ensure you are maximising all available tax benefits.