If you use a Plug-in Hybrid Electric Vehicle (PHEV) for work and charge it at home, working out exactly how much of your electricity bill relates to the car has always been a genuine headache. Your home’s electricity meter doesn’t separate “car” from “everything else,” and most people aren't about to install separate metering just to satisfy the ATO.

The good news: as of November 2025, the ATO has extended its simplified home charging methodology to cover PHEVs specifically, closing a gap that's existed since the original guideline was introduced for fully electric vehicles back in 2024.

In February 2024, the ATO released a Practical Compliance Guideline introducing acents-per-kilometre method for calculating the electricity cost of charging an electric vehicle at home; the EV home charging rate. The rate is currently 4.2 cents per kilometre, rising to 5.47 cents per kilometre from the 2027 income year.

The original guideline only applied to zero emissions vehicles; vehicles powered solely by an electric motor, drawing energy from a battery, an external power source, an electric generator, or a hydrogen fuel cell. PHEVs, which combine an electric motor with a petrol or diesel engine, were left out entirely, despite facing exactly the same “how do I separate the electricity cost” problem.

That gap has now been closed. The updated Practical Compliance Guideline (effective 20November 2025) introduces a dedicated methodology for PHEVs, applying retrospectively from 1 July 2024 (the 2025 income year). The original EV methodology has applied since 1 July 2022.

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When can you use the home charging rate?

Whether you drive a fully electric vehicle or a PHEV, three conditions need to be met:

1. The  vehicle is used to produce your assessable income; this applies to employees claiming work-related car expenses and to anyone otherwise entitled to claim motor vehicle deductions.
2. You’ve actually incurred electricity costs charging it at home; this is satisfied even in a shared household arrangement, where you have a joint obligation to pay the power bill.
   
3. You’ve kept the right records, specifically
   
   1. A valid logbook demonstrating your business-use percentage
   2. Odometer records for the year;
   3. At least one electricity bill from your home for the relevant year; and
   4. For PHEVs specifically, records substantiating your actual petrol costs, this is the one extra requirement PHEV owners face that EV owners don't.

You don’t have to use the ATO’s rate; you can instead work out and claim your actual electricity cost if you prefer. But if you choose the ATO’s methodology, that choice locks in for the entire income year. You’re free to switch methods from one year to the next.

How it works for a fully electric vehicle

For a zero-emissions EV, the calculation is straightforward:

Total kilometres travelled × 4.2 cents = home charging electricity cost

You then apply your business-use percentage (from your logbook) to work out your deduction.

Example: Ben drives his EV 32,000 km in the 2026 income year, with a 50% business-use percentage (16,000 business km).

• Home charging electricity cost: 32,000 km × 4.2 cents = $1,344
• Deduction: 16,000 km ÷ 32,000 km (50%) × $1,344 = $672

Ben can claim $672 for home charging, plus 50% of his other car expenses for the year.

How it works for a PHEV; the new seven-step method

Because a PHEV runs on both petrol and electricity, the ATO needed a different approach: a seven-step process that splits your total annual kilometres into “petrol kilometres” and “electricity kilometres,” based on your actual fuel consumption and your vehicle’s official fuel economy rating.

In broad terms, the steps are:

1. Total up your actual petrol costs for the year (you’ll need receipts for this).
2. Convert that into litres of petrol purchased (either tracked directly, or by dividing your petrol costs by the average petrol rate for the year).
3. Convert your petrol litres into petrol-fuelled kilometres, using your vehicle’s official fuel economy figure (the “Condition B” test cycle rating in standard hybrid mode, available from the manufacturer).
4. Work out your total annual kilometres from your odometer readings.
5. Subtract petrol kilometres from total kilometres to get your electricity kilometres.
6. Apply the EV home charging rate (4.2 cents) to your electricity kilometres to get your electricity cost.
7. Add your actual petrol costs and your calculated electricity cost together for your total fuel expense

You then apply your business-use percentage to your total car expenses (fuel plus everything else, insurance, registration, servicing, depreciation) to arrive at your deduction.

Example: Izaak drives his PHEV 15,000 km in the 2026 income year, with a 50% business-use percentage. His actual petrol costs are $750, his other car expenses are $10,000, his vehicle's fuel economy rating is 5 litres per 100 km, and the average petrol price for the year is $1.98/litre.

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Izaak’s total car expenses for the year are $11,062 ($10,000 + $1,062 in fuel). Applying his 50% business-use percentage, his deductible car expenses are $5,531.

Note that “petrol” for this purpose isn’t limited to standard unleaded, it also covers premium unleaded, ethanol blends, diesel (regular and premium), lead replacement petrol, and LPG.

What if you also charge at a commercialcharging station?

Many EV and PHEV owners top up away from home occasionally, either at a shopping centre, a highway charger, or some similar location. How this interacts with the home charging rate depends on whether your vehicle can accurately report what percentage of its charging happened at home versus elsewhere.

If your vehicle can’t determine this split: You have to choose one approach or the other, you can’t combine them. Either:

• Use the home charging rate across all your kilometres, and simply disregard any commercial charging costs you incurred; o
• Claim your actual commercial charging costs, and don't apply the home charging rate at all.

It’s worth running the numbers both ways, since the better outcome will depend on your specific costs and kilometres.

If your vehicle can determine this split (increasingly common with newer EVs and  log charging location): You can combine both. Your relevant kilometres for the home charging rate are scaled down by your home-charging percentage, and your actual commercial charging costs (apportioned for business use) are added on top.

Example: Jayvan’s EV travelled 10,000 km in the 2026 income year, charging 75% at home and the rest commercially (costing him $400, with receipts). His business-use percentage is 4

• Home charging kilometres: 10,000 km × 75% = 7,500 k
• Home charging cost: 7,500 km × 4.2 cents = $315
• Home charging deduction: $315 × 40% =x $126
• Commercial charging deduction: $400 × 40% = $160
• Total charging deduction: $126 + $160 = $286

The samel ogic applies to PHEVs that can identify their home-charging percentage, with the adjustment built into the seven-step methodology at the electricity-kilometres stage.

If you have questions about which method gives you the best outcome, reach out to our office today

If you drive a PHEV for work and charge it at home, this update is genuinely good news; it removes a compliance gap that’s existed for almost two years and gives you a recognised, defensible way to calculate your electricity costs without needing separate metering.

To take advantage of it, make sure you’re keeping

• A current logbook showing your business-use percentage
• Odometer readings for the year;
• At east one home electricity bill; and
• Receipts for your actual petrol purchases; this is the detail PHEV owners most often overlook, since it's easy to assume the simplified rate covers everything.

If you’d like help working out which method gives you the best outcome, the ATO’s rate, or your actual costs, or you’re not sure whether your logbook and records meet the substantiation requirements, get in touch with our office.

This article is general in nature and does not constitute tax advice. It is based on Practical Compliance Guideline PCG 2024/2 as updated on 20 November 2025. Speak with us about how these rules apply to your specific circumstances.