Written

For

The

Australian

-

Labor’s

EV

tax

breaks

are

here

to

stay

but

watch

out

for

road

usage

charge

ahead

Are Australia's EV tax breaks too good to be true? At $564 million a year in foregone revenue — ten times more than Treasury forecast — they might just be.

With Labor back in power, EV buyers can breathe easy. The generous FBT exemption on electric vehicles under the luxury car tax threshold of $91,387 lives to fight another day. For anyone on the top marginal tax rate, salary packaging an EV through a novated lease is genuinely one of the best legal tax perks available in Australia right now. You're effectively saving 47 per cent on the cost of financing and running the car — the whole lot paid from pre-tax income.

That's a big deal. And it explains why EVs are pushing towards 10 per cent of new car sales. It also helps that the market has shifted. Teslas used to be $100,000 toys for the wealthy. Today, a Chinese-built EV can be driven away for around $35,000. The economics are compelling — especially if you've got solar panels at home and can charge for next to nothing while sidestepping the 50.8c fuel excise.

But there's a catch coming. The plug-in hybrid FBT concession ended last month, which will likely slow sales of vehicles like the BYD Shark 6. And my view is that a road usage charge for EVs is a matter of when, not if. The Coalition was openly pushing for one, and after the High Court knocked back Victoria's attempt, the ball sits squarely with Canberra. With $564 million a year being handed back to EV buyers and fuel excise revenue eroding as more petrol cars come off the road, the fiscal pressure will only grow.

If you're thinking about an EV, my advice is to move sooner rather than later. Lock in the tax benefits while they're still on offer — and don't be shocked when a per-kilometre charge appears in next year's federal budget.