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Taxes on EVs Cut, Incentives Added in Australia

Import tariffs and the Fringe Benefits Tax (FBT) will be cut on electric vehicles costing below $84,000 (AUD) in Australia. It is an exciting time to be watching the surge in EV ownership taking place as Labor makes good on its election promises. Taxes on EVs cut, incentives added — the electric future is bright. All states also offer cash incentives to the purchasers of an EV.

Australian Labor was elected to govern at the federal level earlier this year and is now making good on its promise to make it easier for people to buy an electric vehicle. Although Labor has a majority in the House of Representatives, it relies on support from one minor party (the Greens) and an Independent senator to pass legislation in the Senate. That support has now been locked it.

A quick review of the comprises made brings a smile to my face. Tax breaks will be offered to BEVs and PHEVs, but not to HEVs despite the likelihood of heavy lobbying by a certain carmaker. Independent Senator David Pocock negotiated a sunset clause — PHEVs will no longer be eligible after April 1st 2025.

“Labor unveiled the plan on May 1 during the election campaign and cited estimates from the Electric Vehicle Council that a $50,000 model such as the Nissan Leaf would be at least $2000 cheaper under changes if import tariffs were removed. It estimated the FBT exemption would save employers up to $9000 a year on vehicle costs,” The Age reports.

Greens leader Adam Bandt said the agreement also meant the government would put a priority on electric vehicles in the federal government fleet. The generous threshold of $84,000 (AUD) means that most EVs currently available in Australia will be eligible, including the Tesla Model 3, the base Tesla Model Y, the Nissan Leaf, and the Volvo XC40 Recharge.

This legislation now places Australia in a similar position to that of the UK a couple of years ago. Similar changes there saw EV penetration grow to 25% in two years, with an expected boost to the second-hand market as fleet vehicles came off lease.

I expect we will see a lot more ships arriving and a lot more launches of electric vehicles new to the Australian market.

 
 
 
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Written By

David Waterworth is a retired teacher who divides his time between looking after his grandchildren and trying to make sure they have a planet to live on. He is long on Tesla [NASDAQ:TSLA].

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