The Australian Taxation Office (ATO) has released Draft PCG 2024/2DC, expanding its guidance on how to claim electricity costs for plug-in hybrid electric vehicles (PHEVs) charged at home. Previously, PCG 2024/2 applied only to fully electric vehicles (EVs).
This draft update is an important development for individuals and businesses using PHEVs for work or business purposes.
What’s changing?
Under the new draft guideline:
- PHEV owners can use a standard method to estimate home charging costs
- You can split kilometres travelled on electricity vs petrol
- A fixed rate of 4.20 cents per kilometre applies to electric kilometres charged at home
- Accurate record-keeping is essential to substantiate claims
Who’s affected?
The guidance applies to:
- Individuals who own or lease PHEVs for business or work purposes
- Employers providing PHEVs or reimbursing employees under salary packaging arrangements
- Businesses with FBT exposure, as this method influences how car benefits are calculated
For employers, this draft guidance is particularly important because it affects how fringe benefits tax (FBT) is calculated on company-provided PHEVs. If you reimburse charging costs, you’ll need to use this method to remain compliant.
How to calculate home charging costs
The ATO has outlined a step-by-step method for calculating electricity costs for PHEVs:
- Record actual petrol costs for the year
- Calculate litres of fuel consumed: petrol costs ÷ average petrol price
- Estimate petrol kilometres: litres consumed ÷ vehicle’s petrol consumption rate
- Record total kilometres travelled: based on odometer readings
- Calculate electricity kilometres: total kilometres – petrol kilometres
- Multiply electricity kilometres by 4.20 cents/km to determine home charging cost
- Add petrol costs and calculated electricity costs to determine total vehicle running costs
Key dates
The guideline will apply from the 2024–25 FBT year and income year. As this measure is still in draft form, the details could change before finalisation.
What records you need to keep
The ATO has made it clear that accurate records are essential. To claim PHEV charging costs, you’ll need:
- odometer readings
- Petrol costs and average prices
- The vehicle’s petrol consumption rate
- Calculations showing how petrol and electric kilometres were determined
Without proper documentation, you may not be able to substantiate your claims if the ATO reviews your return.
Why this matters
The new method allows individuals to claim a standard rate for charging PHEVs at home, reducing complexity. However, because it may also affect employer-provided vehicles and FBT obligations, businesses need to review their processes carefully.
Next steps
- Begin tracking your vehicle usage now to prepare for compliance
- Ensure your records are complete and accurate
- Speak with your accountant or tax advisor to understand how the draft guidance may affect your deductions or FBT obligations
Get advice from LDB
Understanding the ATO’s evolving approach to EV and PHEV charging costs is important for both individuals and businesses.
At LDB, our accountants and tax advisors in Blackburn, Melbourne, can help you interpret the draft rules, prepare accurate records, and ensure you are maximising your entitlements while staying compliant.
Call us today on (03) 9875 2900 or get in touch online to discuss how these changes may affect you.
Or you can follow LDB on LinkedIn for updates on tax, superannuation and business advice.
