Hopefully when the dust settles and the AEC officially announces the winners and losers in the Federal election, the new Labor government will be able to act on their Electric Vehicle Car Discount policy which outlines an exemption on FBT for electric vehicles from 1st July 2022.
This change to FBT will significantly reduce the Total Cost of Ownership for electric vehicles and bring them even closer to price parity with petrol and diesel fleet cars.
It could accelerate the tipping point and allow Fleet Managers to introduce more comprehensive electric vehicle trials across their fleet because employees will be able to take the cars home overnight to experiment with home charging without incurring any FBT expenses.
Businesses could save thousands of dollars annually with this policy and eliminate the costly administration process required to accurately report and minimise their annual FBT expense on vehicles.
Novated leasing may also get a significant boost because employees will save thousands of dollars in FBT which will amplify the benefits of salary packaging an electric vehicle compared to a petrol or diesel car.
Here are the key details from the policy page.
A Labor Government will introduce an Electric Car Discount – to make electric cars cheaper so that more families who want them can afford them, and to reduce emissions.
As part of the Discount, Labor will exempt many electric cars from:
- Import tariffs – a 5 per cent tax on some imported electric cars; and
- Fringe benefits tax – a 47 per cent tax on electric cars that are provided through work for private use.
These exemptions will be available to all electric cars below the luxury car tax threshold for fuel efficient vehicles ($77,565 in 2020-21).
This cut-off will encourage car manufacturers to import and supply more affordable electric models in Australia.
To support the Electric Car Discount, a Labor Government will also work with industry, unions, states and consumers to develop Australia’s first National Electric Vehicle Strategy, including consideration of:
- further measures to increase electric car sales and infrastructure;
- policy settings to encourage Australian manufacturing of electric car components (especially batteries) and possibly cars themselves; and
- ways to address the policy implications of declining fuel excise.
Labor will consider how the Commonwealth’s existing investment in infrastructure can be leveraged to increase charging stations across the country and consider how other existing Commonwealth investments, including in its fleet, property and leases, can also be leveraged.
Labor’s Electric Car Discount will begin on 1 July 2022 and be reviewed after three years, in light of electric car take up at that time.
Note: The Labour Government will need to get the policy convert to a Bill and passed by both houses of parliament first.