Australia winds back full EV tax exemption, locks in 25% discount to save $1.7b
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The news: The Albanese government will wind back its electric vehicle tax break in next week’s budget, phasing out the full fringe benefits tax exemption and replacing it with a permanent 25% discount.
That would save $1.7 billion as the scheme’s cost blows out from a projected $605 million to $10.1 billion over seven years, according to the Grattan Institute.
Treasurer Jim Chalmers and Energy Minister Chris Bowen announced in joint statements cited by media on Monday that the full FBT exemption, which has been in place since early 2023, will only continue until the end of March 2027.
From April 2027 to April 2029, the full discount will apply only to EVs costing under $75,000. Vehicles priced between that threshold and the luxury car tax threshold of $91,387 will receive a 25% FBT discount.
From April 2029, all EVs below the luxury car tax threshold will receive only the 25% discount. Existing leases will not be affected and eligible vehicles will remain exempt from import tariffs.
What they said: “The new rules will encourage manufacturers to offer more affordable and cheaper to run EVs in the Australian market,” Chalmers and Bowen said.
The numbers: EVs accounted for 15% of new car sales in March, double the share from a year earlier, according to the Federal Chamber of Automotive Industries. The increase was partly driven by fuel price spikes following the closure of the Strait of Hormuz in late February.
The sources: Bloomberg, The Conversation, The Guardian
