Yahoo Finance Budget 2022: $4,700 tax breaks for Aussies to embrace electric vehicles
In a bid to help increase the uptake of electric vehicles (EVs), the Federal Government has announced a $345 million Electric Vehicle Discount in tonight’s Budget.
As part of the Government’s Electric Vehicle Strategy, it plans to remove the Fringe Benefits (FBT) from eligible vehicles and scrap the current 5 per cent import tariff, with the bill currently before Parliament.
The 47 per cent FBT applies to cars provided through work for private use. Removing this would save employers up to $9,000 a year for a $50,000 model.
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For individuals using salary sacrifice arrangements to pay for the vehicle, their savings would be up to $4,700 a year.
It is estimated that removing the import tariff will make a $50,000 model around $2,500 cheaper.
To be eligible for the FBT exemption, cars need to be sold below the luxury tax threshold, currently $84,916 for the 2022/23 year.
The proposed changes will apply to electric vehicles and plug-in hybrid electric vehicles.
The Coalition has questioned the cost of the policy, while the Greens and independent senator David Pocock are pushing the Government to exclude plug-in hybrid cars from the exemptions and are concerned the scheme would create a fossil fuel subsidy and slow the transition to EVs.
If the bill becomes law, the FBT exemption will apply retrospectively from July 1, 2022 to eligible vehicles.
EVs make up just 3.39 per cent of new car sales in Australia, despite a sharp increase over the past year.
Australia is lagging behind the rest of the world, with the average uptake currently 8.6 per cent and a whopping 26 per cent in Germany and 19 per cent in the UK.
Labor has also announced a $500 million Driving the Nation Fund, including vehicle charging infrastructure at 117 highway sites and hydrogen highways for key freight routes.
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