Tax breaks are coming to electric vehicles, as detailed in the 2022 Budget unveiled by the Federal Labor Government overnight, with as much as $4,700 on offer for individuals thanks to the Electric Vehicle Discount.
Electric vehicle affordability is a big sticking point for the adoption of the technology, which the proposed budget measure aims to address. Under the Electric Vehicle Discount, yet to go through Parliament, eligible electric vehicles will be exempt from fringe benefits tax (FBT) and the five per cent import tariff. $345 million has been allocated to this initiative.
In an example included in the Budget overview document, a car valued at $50,000 – the lower end of electric vehicles available in Australia – the FBT would save employers as much as $9,000 a year. For individuals purchasing an eligible car through salary sacrificing, it would save up to $4,700 a year on tax. If the vehicle in question was previously subject to an import tariff, the Federal Government estimates up to $2,500 would be saved. Also, the FBT exemption only applies to cars cheaper than the luxury tax threshold, which as of the 2022/23 financial year sits at $84,916. If the bill passes, the Electric Vehicle Discount measures will apply retrospectively from 1 July 2022.
“In tonight’s Budget the Federal Government has delivered on its commitment to support EVs, while laying the groundwork for the future,” Jafari wrote. “Now to delivering the National EV Strategy. A strong Fuel Efficiency Standard will unlock investment from industry allowing [government] to fill gaps.”
Consultation on the National Electric Vehicle Strategy is currently open until 31 October, following multiple information sessions in recent weeks. Among the goals of this strategy are to increase electric vehicle affordability and uptake, reduce emissions, and increase local manufacturing.
An additional investment announced in the 2022 Budget goes towards establishing the Driving the Nation Fund, with $275.4 million over six years funding various initiatives. $39.8 million of this is for 117 electric vehicle fast charging stations across Australian highways. It comes off the back of several State Government investments, including a partnership between NSW and MG Motor Australia, and WA sourcing chargers from Australian company Jet Charge. The Federal Government also committed to a 75 per cent electric vehicle fleet by 2025 through its purchases and lease arrangements.
It’s good to see Federal support for electric vehicles, which should hopefully make it a little easier to afford the emerging technology.