Today, the Government has introduced the Treasury Laws Amendment (Electric Car Discount) Bill 2022 into Parliament.
This Bill is good for motorists, good for employers and their workers, and good for climate action.
It implements the Government’s plan to remove fringe benefits tax (FBT) to make electric cars cheaper so that more families who want them can afford them.
The legislation will amend the Fringe Benefits Tax Assessment Act 1986 to exempt from FBT the use of eligible electric cars made available by employers to employees.
This FBT exemption will apply to battery electric cars, hydrogen fuel cell electric cars and plug‑in hybrid electric cars.
The exemption will be available for eligible electric cars with a first retail price below the luxury car tax threshold for fuel efficient cars ($84,916 for 2022‑23) first made available for use on or after 1 July 2022.
If a model valued at about $50,000 is provided by an employer through this arrangement, our fringe benefits tax exemption would save the employer up to $9000 a year.
For individuals using a salary sacrifice arrangement to pay for the same model, their saving would be up to $4700 a year.
This measure forms part of the Government’s Electric Car Discount, which will reduce the up‑front and ownership cost of electric vehicles, addressing a significant barrier to their uptake.
The FBT exemption will be implemented as an ongoing measure and reviewed after three years in light of electric car take‑up to ensure it remains effective.
On top of today’s bill, the Government will also introduce changes to remove the five per cent import tariff for eligible electric cars, as well as the extremely overdue development of Australia’s first national Electric Vehicle Strategy.
The transport sector is one of the fastest‑growing sources of emissions in Australia and the stronger uptake of electric vehicles can make a substantial impact in our efforts to tackle climate change.
Importantly – as families struggle with the rising cost of fuel – encouraging more affordable EVs into the market is an important step in addressing transport costs over the medium term and building resilience to global oil prices.
Yet, right now Australia lags far behind our international peers when it comes to electric vehicle use.
This legislation will encourage greater take up of electric cars and contribute to reducing transport emissions.