$13,296 blow for EV drivers as major electric car tax break could soon be scrapped: 'Would not buy'
Generous tax subsidies for electric vehicles (EVs) could soon be phased out as the federal government tries to rein in spending. EV drivers have been able to save thousands of dollars thanks to Fringe Benefits Tax (FBT) exemptions and other incentives.
Sydney resident Tom Gao told Yahoo Finance these tax breaks were the main reason he jumped on the EV bandwagon when he bought his first Tesla. Productivity Commissioner chairwoman Danielle Wood has indicated it could be on the chopping block to make way for cheaper initiatives.
“We have a whole range of policies at both federal and state level to try and reduce carbon emissions,” she said on the ABC’s 7.30 programme.
RELATED
-
Tesla driver backs $13,000 cash boost for EV drivers as popular rebate under fire
-
ATO, Centrelink warning over $100 million Powerball lottery win
“Each of those has sort of an implicit cost per tonne of abatement. Some of those we’ve said in the past are pretty high, things like fringe benefit tax subsidies for EVs.”
The tax break was introduced by Anthony Albanese in 2022 and was designed to boost the number of EVs on Aussie roads. That has definitely been achieved.
According to the Australian Automobile Association, there were 6,752 battery-powered electric vehicles (BEVs) sold in the first quarter of 2022.
Fast-forward to the first quarter of 2024, there were 25,552 sold.
BEV sales have dropped off since then as plug-in hybrids became more popular due to being the best of both worlds between a battery and internal combustion engine (ICE).
Do you have a story? Email stew.perrie@yahooinc.com
How does the fringe benefits tax exemption with electric cars work?
You can deduct the cost of an electric vehicle if:
-
The EV was worth less than $91,387
-
The car was bought with a novated lease
A novated lease allows an employee to buy a new or used car and have their employer cover the cost of lease repayments to an agreed financial supplier.
The employer makes the repayments to the leasing company out of the employee's pre-tax salary in a salary sacrifice arrangement, which reduces the employee's taxable income.
For example, if a worker secured a $68,000 EV through a novated lease through their company, they could save around $13,296 thanks to the exemption.
As many as 100,000 people have taken up the tax break so far, according to the National Automotive Leasing and Salary Packaging Association.
"I would not be buying an EV if FBT exemption is removed," Goa told Yahoo Finance, who feared there would be a "significant drop in EV purchases" if it was scrapped.