Labor Extends EV Tax Perks Amid Road Charge Talks

Electric vehicle buyers keep their tax advantages thanks to Labor’s re-election, aiming to boost cleaner transport while facing growing calls to introduce road usage fees for EV drivers. Incentives like the fringe benefits tax exemption remain, but the rising cost to the federal budget has reignited debate over future charges.

Australia is nearing 10% electric vehicle adoption among new car sales, fueled by increasingly affordable models, some under $35,000, including Chinese imports. The recent end of fringe benefits tax perks for plug-in hybrids like the popular BYD Shark 6 ute may slow hybrid uptake, but fully electric vehicles still come with strong salary packaging rewards.

Novated leases allow employees to finance EVs using some pre-tax income, significantly reducing their effective cost. If the car is under the $91,387 luxury car tax cap, all running and finance costs may be deducted before tax. For people in top tax brackets, this could mean savings of up to 47%, which explains why the exemption is now costing the government approximately $564 million per year, ten times their initial forecast.

With that level of lost revenue, it’s no surprise there’s political pressure to rebalance the scales. A failed effort by one state government to introduce a per-kilometre road charge was shot down by the High Court, stating such levies fall under federal jurisdiction. While this ruling temporarily shields EV drivers, the door remains open for a future federal road usage tax, especially if competing parties push it post-election.

From a household budget perspective, EVs can be nearly cost-free to run when charged directly from rooftop solar. Lower maintenance needs and exemption from the 50.8 cents per litre fuel excise add to the appeal. But as EVs become more common, the conversation is shifting from incentives to infrastructure and how to fund it.

Source: The Australian, ATO, EV Council