The Electric Car Discount

Did you know you could potentially own an EV for the same cost as a petrol model? The Australian Government has introduced an electric car discount program to bring down the costs of electric vehicles.

Employees (salary-sacrifice vehicles)
Company fleets
>>>
Shield-protected

Which vehicles are eligible for the FBT exemption?

New battery-electric and plug-in hybrid electric vehicles, up to a total cost of $89,332, are eligible for this incentive.

One way to check if your preferred EV is eligible for this incentive is to confirm with the seller that no luxury car tax applies to the final sale price. If luxury car tax does apply, then the vehicle is not eligible.

Code

Why is an FBT exemption important?

FBT disadvantages EVs because FBT is proportional to the cost of the vehicle and at present, electric vehicles generally cost more to purchase than similar petrol/diesel vehicles.

A larger FBT cost for employers that choose to adopt EVs is a massive disincentive for people to switch to EVs.

The Electric Car Discount program could save you $3,000 - $5,000 per annum

Electric vehicle models eligible for this incentive

Please note that note that not all variants of the models listed above are eligible for the incentive. The vehicle must not include any luxury car tax in the final sale price. Please confirm this with the seller prior to purchase. 

Why is an FBT exemption important?

Vehicles purchased under salary-sacrifice arrangements, and via company fleets, are often sold after 3 or 4 years as relatively new, second-hand vehicles.

The Australian Government’s electric car discount is helping to accelerate the adoption of EVs in these fleets, which means potentially thousands of these second-hand EV – many still under warranty – will be available for every-day Australians to purchase and benefit from in the next few years.

Play

What will be the impact of a FBT exemption for EVs?

User
For Employees - Novated lease / salary-sacrificed vehicles

A novated lease is a three-way car agreement between an employer, an employee and a financing company. This agreement means that the vehicle is leased by the employer, but the employee can pay for it using pre-tax income – reducing the amount of income tax they pay each year.

Whether salary sacrificing a vehicle ultimately makes sense for you comes down to whether the income tax savings are greater than the FBT payable, and other fees associated with novated leases.

While the impact of the electric car discount will vary depending on your individual circumstances, the FBT exemption for EVs will generally mean that salary-sacrificing will be financially attractive compared to other avenues for purchasing an EV, since no FBT will be payable.

Estimates suggest that you could save between $3,000 and $5,000 in income tax each year, thanks to this new incentive. This could mean that the EV option is as cheap, if not cheaper than comparable petrol/diesel models.

We recommend you seek advice from a qualified accountant before choosing to salary-sacrifice an EV so you can be provided with an accurate estimate of the costs and savings.

Group
For businesses - Company Fleets

Many companies provide vehicles to their employees for work purposes. These vehicles are often garaged at the employees’ home for convenience. As a result, these vehicles are subject to Fringe Benefits Tax as they represent a potential financial benefit, in addition to wages, that is not subject to income tax.

While there are already some exemptions for commercial vehicles, including some utes, the Australian Government’s electric car discount will apply an FBT exemption specifically to EVs. This means that companies can purchase EVs as part of their fleet, and make them available to employees, without paying FBT. This could equate to a saving of over $10,000 per year – depending on individual circumstances, including how often the car is available for private use e.g. parked at the employee’s home.

We recommend companies seek advice from a qualified account to be provided with an accurate estimate of the costs and savings available under this program.

Want to know what EVs you can buy in Australia?
EVs Available

How will the electric car discount benefit Australians who cannot access salary-sacrifice vehicles or company vehicles?

This incentive program will support the rapid uptake of electric vehicles in Australia, particularly in company fleets. This will lead to a significant increase in second-hand EVs, available to all Australians, at prices much cheaper than new EVs.

This is an effective way to increase the number of EVs in Australia in the near-term, while the upfront cost of these vehicles still remains a barrier for many households. Increased demand for EVs will also expand competition in the market, which will help to drive down costs for all Australian consumers.

Other things to note:

Reportable fringe benefits still apply and must be reported by your employer. This means that although you are not taxed on the ‘value’ of the fringe benefit received via access to a company or salary-sacrifice car, this fringe benefit does count towards other government levies and/or rebates including: level of private health insurance rebate, repayment rate of student loads, eligibility for family assistance payments, etc. While this may not impact some consumers, you should always seek independent financial advice.

Plug-in hybrid electric vehicles or PHEVs will not be eligible for the incentive after 1 April, 2025. The current end date for 100% electric / battery-electric vehicles or BEVs, is not yet set, but is likely closer to 2027 at the earliest. Consumers should be aware that if the incentive is removed after 2025, the EV may then become subject to FBT, which may mean it will make more financial sense to sell the vehicle.

Further information is available from the ATO website.

DISCLAIMER: The Electric Vehicle Council is not a financial or taxation advisor. You should seek independent legal, financial, taxation or other advice to check how the electric vehicle discount may be relevant to your specific situation, and the specific electric vehicle you are interested in purchasing.

Arrow-up