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The ATO EV home charging shortcut — how it actually works

For most novated lease expenses, the process is straightforward — you spend $X on something, submit the claim, and that amount is paid from pre-tax dollars.

Electricity is a different beast. Different tariffs, solar vs grid, time-of-use pricing, free public chargers, workplace chargers, battery losses… it quickly becomes a record-keeping nightmare with no clean answer for what was actually spent.

Recognising this, the ATO essentially said: this is getting ridiculous.

So instead of forcing everyone to track the cost of every kWh, they introduced a simplified shortcut method.

Rate updated from 1 April 2026

From 1 April 2026 (the start of the 2026–27 FBT year), the home charging shortcut rate increases from 4.2c/km to 5.47c/km. ATO source

Examples on this page use the updated 5.47c/km rate unless otherwise noted.

What is the EV home charging shortcut?

Under PCG 2024/2, the ATO allows EV owners to claim home charging costs at a flat rate of:

5.47 cents per kilometre driven (from 1 April 2026) Previously: 4.2 cents per kilometre (to 31 March 2026)

This applies to home charging, and it is:

  • based purely on odometer readings
  • completely independent of
    • your electricity tariff,
    • when you charge,
    • how much solar you use,
    • how much free charging you get elsewhere.

In other words:

When it comes to claiming home charging expense, the ATO does not care how you actually charged the car. They only care how far you drove it.

This makes the method simple, cheap to comply with, and very predictable.

How the electricity claim actually works

A common misconception:

I charge for free 1 / extremely cheap e.g. solar or workplace charging, so why am I asked to 'spend $820.50' in the budget when I didn't spend anything?

Claiming $820.50 in electricity does not mean you are spending an additional $820.50. In fact it does not even mean you are spending anything; what instead happens is you receive extra money.

Normally, every dollar of gross income gets taxed before it reaches you. For example, on the 37% + 2% Medicare levy bracket, each additional $1.00 of gross income only becomes $0.61 in your bank account.

When you claim the $820.50 in electricity, you are directing that $820.50 of gross income to be paid out untaxed — as if the ATO agreed to let the full amount pass through.

Compare the two scenarios:

Scenario What happens to that $820.50 of gross income
Without claiming electricity Taxed at 39% → only $500.50 reaches you
With the $820.50 electricity claim Paid out pre-tax → the full $820.50 reaches you

The difference is $320.00 extra — money you would not have had otherwise.

Critically, this $320.00 has nothing to do with your actual charging cost. Whether you charged for free 1, at 8c/kWh, or at 30c/kWh, the claim produces the same extra money.

This is why you should claim the electricity amount even if your real charging cost is zero 1, as demonstrated in the next section.

The formula

Net extra money = claim amount × (marginal tax rate + 2% Medicare levy)

Marginal tax bracket Combined rate Net extra money per $820.50 claimed
30% 32% $262.56
37% 39% $320.00
45% 47% $385.64

The counter-intuitive bit: you can make a net financial gain from charging and driving

Because the pre-tax benefit is fixed by distance — not by what you actually spent — if your real charging cost is low enough, you come out ahead. Here is what that looks like with real numbers.

Example

If you drive 15,000 km in a year and are on top marginal tax bracket (45+2%):

  • Claim amount: 15,000 × $0.0547 = $820.50

Your car has an average efficiency of 150Wh/km, and you charge your car on a cheap tariff of 8c/kWh.

  • Actual electricity expense: 15,000 x 0.15 x $0.08 = $180

When you claim the $820.50,

  • Extra money made = $820.50 × 47% = $385.64

Once you reconcile with your actual expense, post-claiming you have made $205.64 profit from charging and driving the car.

The calculations above are automatically performed in the Detail - Basic Information - Annual Electricity Report, under Post-Reimbursement Effective Charging Expense figure.

The three ways you can claim EV charging

If you read PCG 2024/2 carefully, there are three permissible approaches.

1. Use 5.47c/km for distance driven

This is the simplest and most common method.

As discussed above, you:

  • record odometer readings,
  • calculate the distance driven,
  • claim 5.47c/km for that distance (4.2c/km for FBT years ending before 1 April 2026).

If you choose this approach, you can't claim any commercial charger cost that you have incurred.

2. Claim only commercial charging invoices

If you use commercial chargers often, you can instead:

  • keep invoices from public / commercial chargers,
  • claim the actual dollar amounts paid.

If you choose this approach, you can't claim any home charging.

3. Mixed method (home charging + commercial charging)

This is the least common, but sometimes most beneficial, and it’s the method I personally use some years.

It is also the most record-keeping-intensive approach, and only worthwhile if the additional benefit meaningfully exceeds the extra effort.

You can do this only if:

  • your vehicle can reliably report how much charging occurred at home vs elsewhere, and
  • you keep proper records i.e. odometer reading for the period covering each FBT year i.e. 1 April to 31 March

Note that EV charging claims follow the FBT year (1 April – 31 March), not the income tax year.

The method works like this:

  • home charging distance → claimed at 5.47c/km (pro-rated based on charging ratio; 4.2c/km for FBT years ending before 1 April 2026),
  • commercial charging → claimed using actual invoices.

The home charging to commercial charging ratio is derived from the energy split (kWh charged at home as a proportion of total charging).

Depending on:

  • your home electricity cost,
  • solar usage,
  • commercial charging mix,
  • and any free charging you get,

this mixed approach can result in a higher total claim than using the shortcut alone.

Example:

From the period 1/4/2023 to 31/3/2024, an EV has driven 12,418km. According to the Tesla app, over this period, 1,447 kWh is charged at home out of 2,432 kWh total, which is 59.5%.

This means we can apportion the 12,418km to:

  • 7,389km (59.5%) charged at home
  • the rest charged elsewhere.

We then use the 4.2c/km rate (applicable for the 2023–24 FBT year in this example) to calculate the home portion charging expense, alongside all the commercial charging invoices in this time period, and claim both amounts.

Why the ATO did it this way

The home charging shortcut is not meant to be perfectly accurate.

It is meant to be:

  • simple,
  • cheap to comply with,
  • and good enough for most people.

The ATO explicitly chose administrative simplicity over precision.

If your real costs are lower, you benefit. If your real costs are higher, you wear the difference.

The key takeaway

If you remember nothing else:

The EV home charging shortcut puts extra money in your pocket based on distance driven, and this benefit is yours even if you charge cheaply or for free. 1

For those with solar or cheap tariffs, it is surprisingly generous.

For others, more precise methods may make sense, but only if you are willing and able to do the record-keeping.

Reference

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Workplaces with an exclusive salary packaging provider tend to have noticeably higher effective interest rates on novated leases — yet the commercial terms behind these exclusive arrangements are rarely disclosed to employees.

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  1. The one edge case worth noting: PCG 2024/2 requires that you have actually incurred electricity costs during the year. For the vast majority of solar households this is a non-issue — unless you are fully "off the grid", some grid expenses still appear on every bill. However, if your solar system fully offsets your entire household electricity consumption and your bill is genuinely zero, you may not satisfy this requirement, and the shortcut method would technically be unavailable. This interpretation is not stated explicitly in the PCG itself, but follows from its eligibility criteria. ↩↩↩↩