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Published on March 24th, 2016 | by Giles Parkinson

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Australian Tax Office Ruling Provides Big Boost For EVs

March 24th, 2016 by  

Originally published on RenewEconomy.

An Australian Tax Office ruling has provided a major boost to the economics of electric vehicles in Australia, just as enthusiasts prepare to queue up to register interest to buy the first mass-market electric vehicle to be offered in serious volume in this country.

The ATO ruling means that drivers of electric vehicles will be able to claim the same deductions for business use as they currently do for cars running on internal combustion engines.

That is despite the fact that electric vehicles require less servicing, less often, and their brakes wear less because of regeneration. And, of course, they don’t consumer liquid fossil fuels, although they do need to be charged (either by fossil fuels or via solar panels).

The ruling was actually included in an explanatory memorandum released last year. Previously, drivers of electric vehicles and huyrbid cars did not have access to the cents per kilometer method as the rates were based on engine size.

The ATO ruled that separate rates based on the size of the engine are no longer available, so all motor vehicles will have a single rate of 66c/km – for valid business use.

EV’s, enthusiasts say, typically cost less than a third  of their ICE equivalents per kilometre, and as little as one fifth if charged either on off peak rates or through household rooftop solar.

According to electric vehicle advocates, that means – on the basis of one third running costs – that the ruling may boost the economics of electric vehicles – such as the Tesla Model S, the BMWi, the Nissan Leaf, and the upcoming Tesla X and the mass-market Tesla 3 models – by as much as $2,200 a year.

(Vehicles can claim up to 66c/km for up to 5,000kms. If running costs are one third the cost of ICE, that translates to a benefit of $2,200).

In Australia, unlike the US where there are significant tax breaks and other incentives, as their are in numerous European countries, there is little government support for EVs, apart from reduced registration fees in some jurisdictions.

Australia has been slow to adopt electric vehicles, although wealthy types have been rushing to pick up the high-performance Tesla Model S, priced at $128,000 and beyond for additions and extended range.

But the market may change as early as next week. That’s when Tesla is opening up registrations for its new Model 3, its “mass-market” offering that will be priced at $US35,000.

Australians will be the first in the world to have the opportunity to register their interest to buy a vehicle (at the cost of a $1,500 deposit), with four stores in Melbourne, Sydney and Brisbane opening early to accommodate demand – a full 24 hours before the design and features of the vehicle are released.

Reprinted with permission.

 
 
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About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.



  • Greg Lindstrom

    even on 100% fossil fuels ev is still cleanest cars available correcT?

    • Bob_Wallace

      No quite.

      Good thing is, there probably are no 100% coal grids and global coal use is declining.

      • Pete-In-Oz

        Thanks for the interesting graph Bob. However, it is unclear as to whether the creator of the graph took into account and added into the mix the electricity/CO2 required to refine a gallon of gas or diesel. If not, then that could dramatically change the results of the ICE entries I feel.

        • Bob_Wallace

          True.

          One thing that I find very interesting is that some of the most commonly driven cars/pickups produce about 2x as much CO2 as an EV charging on 100% coal. And the cars that are less polluting than a 100% coal-electric would not be acceptable to much of the car owning world.

  • ROBwithaB

    The big conundrum is how to use the solar on your own roof to charge your own car, which spends most of its time (during daylight hours) in a parking lot somewhere else.

  • ROBwithaB

    The big conundrum is how to use the solar on your own roof to charge your own car, which spends most of its time (during daylight hours) in a parking lot somewhere else.

    • Ronald Brakels

      Actually the majority of privately owned cars spend most of the day parked at home in Australia.

      Mind you, we have a lot of cars.

    • Greg Lindstrom

      its called powerwall and its bloody expensive

  • Pete-In_Oz

    Whilst this is somewhat good news for EV tax deductions (e.g. if you are an Uber Driver), I tend to agree with Carl and Ronald in that the level of other incentives for the uptake of EVs or any investment in charging infrastructure is just crap here in OZ at the moment.

    It seems to me (sitting here in the Australian Capital Territory) that those squabbling over the pig trough in that grassy knoll called Parliament House, have lost they environmental way as they have not murmured a word but seem too busy taking pot shots over senseless issues and have forgotten about any of the supposed undertakings from the recent Paris CC Convention.

    I am sure I am not alone in saying that I have lost considerable faith in the supposed democratic political system here in OZ and feel that I may as well vote for someone like Ronald McDonald then any of the wankers that we supposedly have representing us at the moment. No doubt most Americans probably feel the same way about their representative choices also at the moment. 🙁

    Roll on our respective elections.

  • Pete-In_Oz

    Whilst this is somewhat good news for EV tax deductions (e.g. if you are an Uber Driver), I tend to agree with Carl and Ronald in that the level of other incentives for the uptake of EVs or any investment in charging infrastructure is just crap here in OZ at the moment.

    It seems to me (sitting here in the Australian Capital Territory) that those squabbling over the pig trough in that grassy knoll called Parliament House, have lost they environmental way as they have not murmured a word but seem too busy taking pot shots over senseless issues and have forgotten about any of the supposed undertakings from the recent Paris CC Convention.

    I am sure I am not alone in saying that I have lost considerable faith in the supposed democratic political system here in OZ and feel that I may as well vote for someone like Ronald McDonald then any of the wankers that we supposedly have representing us at the moment. No doubt most Americans probably feel the same way about their representative choices also at the moment. 🙁

    Roll on our respective elections.

  • Carl Raymond S

    Not so much a boost, as a removal of the handbrake. Rediculous that the EV could not be claimed as a business deduction because it had no ‘engine capacity’.
    Still waiting for Malcolm Tunbull to demonstrate he’s any better than Tony ‘coal is good for humanity’ Abbott.
    The boost comes from the lower running cost of electrics, and I refuse to give Malcolm credit for the laws of physics.

    • Ronald Brakels

      There is no indication he will turn the bull around. Oh sure, maybe he’ll do things differently after the election, but I think I will vote for someone how specifically says they will do things differently rather than just hope the current guy will do stuff he hasn’t said he will do and has made no move to do.

      And what’s he got to offer? Cuts to company taxes? Wasn’t the Coal-ition telling us not that long ago that things were so bad we had to cut unemployment benefits, health care, and education but suddenly we can afford to give tax cuts to companies? What the hell changed? Did we recently win a 300 billion dollar bet with France or something?

  • Ronald Brakels

    This is not a big boost for EVs. This is the tax office doing their job. They are supposed to resolve things in a fair and equitable manner. On their website it even says, “We will not act like a pack of stroppy mongrels.” I am paraphrasing slightly there.

    Australia has only one real incentive for electric cars and that is a tax on guzzoline and diesel and LPG. The effect of reduced registration fees in some states are not and much may be lost through higher charges on heavier vehicles.

    And Australia has a major disincentive for electric vehicles in some of the highest retail electricity prices in the world. But by reducing solar feed-in tariffs to just a few US cents, state governments have kindly made charging from new rooftop solar during the day effectively very cheap. Thanks guys!

  • Matt

    “although they do need to be charged (either by fossil fuels or via solar panels).” Wait, what about Nuc, wind, tide, sheep farts. Was the part between () to be a dig? Would not “although they do need to be charged.” be better?

    • Ronald Brakels

      Plug in to the grid in Australia and on average the electricity is going to be about 90% fossil fuel. So the sentence could have been written better, but unfortunately is mostly true.

      • Carl Raymond S

        More EVs > more batteries > cheaper batteries > more renewables > cleaner air.
        Gotta start somewhere, and a car that wins on so many levels looks like a good place.

      • Carl Raymond S

        More EVs > more batteries > cheaper batteries > more renewables > cleaner air.
        Gotta start somewhere, and a car that wins on so many levels looks like a good place.

      • EPIK design

        Although it is 90% fossil fueled, solar is growing fast, and the grey energy used to make electricity is probably similar to the grey energy used to make petrol, but the electric car does not produce any co2 to move, so it’s still a big plus compare to ICE engine

        • Ronald Brakels

          A majority of electric car owners in Australia have rooftop solar and typically will do at least some of their charging from that. So thanks to electric vehicles being vastly more efficient than internal combustion engine ones, even in Australia an electric car is likely to result in less CO2 emissions than a petrol powered one.

          • ROBwithaB

            How much workplace solar has been installed in Oz?
            The growth of residential rooftop solar down under is a well-known success story.
            But most people with cars have a job. And most people drive to work. Taking the car away from their home (and their solar panels) for most of the sunny part of any particular 24 hour period.
            It makes more sense to charge at work, especially if the boss can deduct the costs of the entire installation from the company’s taxable profit. My personal favourite “EV incentive plan” would simply be to allow accelerated tax write-offs for installation of workplace solar and charging infrastructure.
            Any employee basically gets free fuel for as long as they work at the company. That’s a big perk. And a big reason to get (at least) one EV per middle class family.

          • Ronald Brakels

            Commercial solar has really taken off in Australia. Household solar was hurt by feed-in tariffs for new solar being slashed to roughly the wholesale cost of electricity during the day. And not a sensible gradual reduction but a massive sudden cut. The most extreme example being in Queensland where the feed-in tariff went from 33 US cents a kilowatt-hour to 6 US cents and then to no set tariff but typically around 4.5 US from electricity retailers.

            However, commercial solar never had good feed-in tariffs. So with the decreasing cost of solar it has started taking off over the past couple of years and has made up for a lot of the decrease in household solar installation. And an interesting thing is, a lot of it has been installed in Victoria which has the least sunshine of any mainland state and the lowest electricity prices. On the other hand, Victoria does have a significant amount of industry that operates 7 days a week and so can utilize every solar kilowatt-hour they generate, except perhaps over Christmas as they might shut down then.

            Mind you, commercial solar hasn’t had it easy. Especially in places like Queenland the Sunshine State, which may explain why cloudy Victoria has so much. Installing solar can result in what businesses are charged for grid electricity to increase. They can be banned from exporting any electricity to the grid. And there have been attempts to raise fixed charges and use that revenue to lower the cost per kilowatt-hour to discourage solar. The worst example being in Queensland where there was an attempt to make some businesses pay $500 ($380 US) a day in fixed charges. That’s $183,000 ($139,000 US) a year.

            But I will repeat what I have written previously about charging electric cars at work in Queensland:

            “Hello. I am Queensland Australian business.”
            “Hello. I am Queensland Australian business employee.”
            “Hellos employee.”
            “Hellos boss. Can I haves electricities for car?”
            “Yes, you can has electricities for car. We has big solar panels and can’t exports electricities to grid.”
            “Why you no export electricities to grid?”
            “Because coals.”
            “How much is electricities?”
            “Spare electricities is free.”
            “Why you no charge?”
            “Because hates coals.”
            “Thanks boss!”
            “Gets to work. Them banannas not going to bend selves.”

          • ROBwithaB

            How much workplace solar has been installed in Oz?
            The growth of residential rooftop solar down under is a well-known success story.
            But most people with cars have a job. And most people drive to work. Taking the car away from their home (and their solar panels) for most of the sunny part of any particular 24 hour period.
            It makes more sense to charge at work, especially if the boss can deduct the costs of the entire installation from the company’s taxable profit. My personal favourite “EV incentive plan” would simply be to allow accelerated tax write-offs for installation of workplace solar and charging infrastructure.
            Any employee basically gets free fuel for as long as they work at the company. That’s a big perk. And a big reason to get (at least) one EV per middle class family.

      • EPIK design

        Although it is 90% fossil fueled, solar is growing fast, and the grey energy used to make electricity is probably similar to the grey energy used to make petrol, but the electric car does not produce any co2 to move, so it’s still a big plus compare to ICE engine

      • Greg Hudson

        Check out RED Energy (aka Snowy Mtns Hydro)

      • Greg Hudson

        Check out RED Energy (aka Snowy Mtns Hydro)

        • Ronald Brakels

          Purchasing green energy can get one’s house and electric car powered by renewable energy in an accounting sense. But outside of Tasmania and South Australia and a few solar powered remote communities, about 90%+ of the actual energy causing electrons in the grid to flip back 50 times a second comes from the burning of fossil fuels.

          I’m not saying don’t pay for a green power plan. But I will say that seeing solar panels on someone’s roof makes me happier than seeing the word green on their electricity bill. Nowadays it’s not that difficult to get a system large enough to guarantee the majority of energy flipping the electrons back and fourth in your household wiring is clean and green, during the day at least.

          • Greg Hudson

            If you choose Green Energy from RED, they guarantee 100% is sourced from Hydro, Wind or Solar. No coal at all. They are also 100% Aussie owned (which a lot are not).

          • Greg Hudson

            If you choose Green Energy from RED, they guarantee 100% is sourced from Hydro, Wind or Solar. No coal at all. They are also 100% Aussie owned (which a lot are not).

        • Ronald Brakels

          Purchasing green energy can get one’s house and electric car powered by renewable energy in an accounting sense. But outside of Tasmania and South Australia and a few solar powered remote communities, about 90%+ of the actual energy causing electrons in the grid to flip back 50 times a second comes from the burning of fossil fuels.

          I’m not saying don’t pay for a green power plan. But I will say that seeing solar panels on someone’s roof makes me happier than seeing the word green on their electricity bill. Nowadays it’s not that difficult to get a system large enough to guarantee the majority of energy flipping the electrons back and fourth in your household wiring is clean and green, during the day at least.

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