Electric Car Tax Breaks Preserved with Albanese Government Re-Election
Electric vehicle enthusiasts can breathe a sigh of relief following the Albanese government’s re-election, as significant tax breaks for EVs have been saved. EVs now make up nearly 10% of new car sales in Australia, with prices becoming increasingly accessible to the average consumer.
The Chinese-built EV market has driven prices down, with some models available for as low as $35,000 inclusive of on-road costs. However, the fringe benefits tax (FBT) concessions for plug-in hybrids ended recently, which could impact future sales of models like the BYD Shark 6 ute, currently Australia’s sixth best-selling vehicle.
Novated Leases and Salary Packaging Explained
For brand new EVs, lucrative tax incentives remain in place. Employers can offer novated leases, allowing staff to salary package vehicles. This arrangement enables employees to pay for vehicle costs using pre-tax dollars, with the employer covering financing and operating expenses.
Under current regulations, EVs costing less than $91,387 qualify for FBT exemption, introduced on July 1, 2022. This means that 100% of financing and operating costs can be paid using pre-tax income for eligible vehicles. For higher-income earners, this represents a significant tax saving of up to 47%.
Future Challenges for EV Owners
Despite the current tax benefits, political opposition to EV privileges continues. The Coalition has previously proposed introducing road charges for EV drivers, arguing that they should contribute to road maintenance costs like traditional motorists who pay fuel excise. Although a recent High Court ruling blocked a Victorian government attempt to impose such a charge, stating that only the federal government can levy this type of tax, the issue remains unresolved.
With Labor securing at least another three years in power, Prime Minister Anthony Albanese will need to decide whether to implement an EV road usage charge. This potential development could impact the financial benefits of EV ownership in the future.
Financial Benefits of EV Ownership
Currently, owning an EV can be financially advantageous under certain conditions. For those with solar panels, charging an EV during the day can significantly reduce running costs, avoiding the 50.8c fuel excise. Additionally, EVs typically have lower ongoing service and maintenance costs due to fewer consumable parts compared to internal combustion engine vehicles.
While the tax incentives for purchasing EVs are currently secure, the possibility of introducing road usage charges in the future remains a consideration for prospective buyers. As the EV market continues to evolve in Australia, consumers must weigh both the current benefits and potential future changes in government policies.
