Salary sacrificing a car is a popular strategy for achieving tax savings for employees. Now there's a new kid on the block for those eco-friendly and health conscious employee's... the E-stralian electric bicycle or "e-bike".
At the end of 2015, the ATO released a Class Ruling (CR 2015/80) which states that NO fringe benefits tax (FBT) will generally arise for employers who provide an employee with the use of an e-bike for their private travel between home and work under a salary sacrifice arrangement. This means, the cost of providing an e-bike in these circumstances is completely tax deductible and GST claimable to the employer, with no FBT consequences, provided that private use of the bike is limited to;
Travel to and from work
Travel that is incidental to travel undertaken by the employee in performing their work duties (e.g. where the employee picks up mail on way to work)
Private use that is minor, infrequent and irregular (e.g. where occasionally an employee visits a friend on their way home from work)
Where the usage of the bike does include private usage beyond the above scenarios, the benefit provided will be a "residual fringe benefit" and taxed under with the operating cost method or cents per kilometre method (currently 15cents per private km travelled).
The novated lease agreement under the above arrangement would include;
E-stralian leases the "e-bike" to the employer, and the employer pays the lease and costs associated with the provision of the lease.
The employer obtains full comprehensive insurance cover against loss or damage to the e-bike
The employer is responsible for all maintenance costs etc.
At the end of the lease, the employer will deliver possession of the e-bike to E-stralian