During the 2022 election campaign, the ALP announced a policy that created excitement amongst EV enthusiasts and Fleet Managers. And unlike the 2019 election, action on climate change was now a key issue and no one could claim that EVs will ‘end the weekend’ for Australians.
The main policy item was making electric vehicles exempt from Fringe benefits tax (FBT).
FBT is either easy or hard for organisations. Some do it well and know how to reduce their liability with good record keeping using the logbook method. Some develop fleet polices to avoid it (i.e. no personal use of vehicles, or only using light commercial vehicles). And others just pay it using the statutory method which can cost them thousands of dollars more than the logbook method.
Making EVs exempt from FBT will do several things:
- Save businesses money because they won’t need to calculate or pay FBT.
- Encourage trials in the workplace because home garaging won’t attract FBT.
- Increase demand for EVs as novated leases because the FBT exemption will make them more attractive to salary package.
It won’t help mums and dads in the short term, however over time it will create a pipeline of second hand electric vehicles making it cheaper for families to bypass petrol stations and experience zero emission motoring.
Chris Bowen, Minister for Climate Change and Energy, confirmed the ALP will stick with its election promise to make electric vehicles FBT exempt during a speech at the National Press Club on 29th June.
The Minister said, “When Parliament resumes in late July we will be introducing two pieces of legislation which will progress the agenda for which we received a mandate on May 21. Firstly, the Treasurer and I will take through legislation which implements our electric vehicle tax cut.
“We promised to cut the tariffs and abolish fringe benefits tax on affordable EVs from 1 July this year and that’s exactly what we will do. Of course, the Parliament doesn’t sit until late July, and so we will ask the Tax Office to make the tax cut retrospective, in accordance with usual procedure.
“Of course, the EV tax cut is just one element of our EV policy. We also promised the Driving the Nation plan of an EV fast charger once every 150 kilometres on the nation’s highways.
The other part of the ALP policy was to convert 75% of 10,000 vehicles in the Commonwealth fleet to zero emissions vehicles. It will be a massive task in the short term with the current supply challenges. In the medium term (because they replace the cars every three years) it will create a constant flow electric ex-fleet vehicles for households to purchase.
Hopefully this policy will send a clear signal to vehicle manufacturers to increase supply to capture the opportunity for electric vehicles down under.
