Extension lead for electric car discount
Snapshot
- EV tax discount extended to April 2027, with full FBT exemption largely retained for vehicles under $75,000 before tapering in later years.
- Higher-priced EVs will face reduced or no FBT benefits from 2027, and all EVs will incur some FBT from 2029 (at discounted rates).
- Policy overhaul aims to curb rising costs while still supporting EV uptake, with industry groups broadly welcoming the balanced approach.
All EVs will pay some FBT from 2029, albeit at a discounted rate compared with combustion-powered vehicles.
These are the key takeouts from the Government’s review into the Electric Car Discount which found that the policy, first implemented in July 2022, had cost much more than forecast due to strong uptake.
The ABC reported the popularity of the program cost the budget more than 10 times the $90 million originally forecast, with the new program estimated to save the government $1.7 billion over four years.
Timeline of the updated electric car discount
Under the terms of the new program the full Electric Car Discount remains in place for most EVs until April 2027, after which EVs costing less than $75,000 will continue to receive full FBT exemption until April 2029 after which they will still receive a 25% FBT discount.From April 2027, EVs costing between $75,000 and $91,000 will pay FBT but at a 25% discount to combustion powered vehicles, while EVs costing more than $91,000 will pay full FBT.
Industry and stakeholder reactions
The Electric Vehicle Tax Discount delivers substantial FBT savings on the price of EVs purchased on a novated lease or other employer-provided salary packaging arrangement, with estimated savings of up to $9800 on an EV costing $50,000 versus a combustion-powered equivalent.National Automotive Leasing and Salary Packaging Association (NALSPA) CEO Rohan Martin said the Government’s approach strikes the right balance between cost of living relief, market certainty and long term fiscal responsibility.
“At a time when Australians are feeling real pain at the pump, the Electric Car Discount is helping households take control of their fuel bills while reducing emissions and reliance on foreign owned oil,” Mr Martin said.
The Electric Vehicle Council also welcomed news of the extension of the Electric Car Discount, describing the outcome as a win for Australian families.
"This is good news for everyday Australians who are doing the sums on going electric,” EVC Chief Executive Julie Delvecchio said.
“This decision means most electric cars in Australia will remain eligible for the Electric Car Discount, allowing people to save thousands on their annual fuel bills.“This is especially important for outer suburban households – which are strongly represented in EV leasing uptake – where people drive more and spend more on fuel.”
Key changes under the updated dettings
The Australian Automotive Dealer Association (AADA) also welcomed the announcement, saying that new car dealers were seeing unprecedented demand for EVs in the current economic conditions.
“As the only demand-side initiative from the Federal Government to incentivise the uptake of EVs, the reforms to the electric car discount are pragmatic changes that ensure the initiative can still be available to salary packaged employees,” AADA CEO James Voortman said.
Key changes under the updated settings
- No changes apply until 1 April 2027.
From April 2027:
- EVs priced up to $75,000 continue to receive the full FBT exemption.
- EVs priced between $75,000 and the fuel-efficient LCT threshold (currently ~$91,000) receive a 25% FBT discount applied to the full vehicle value.
From April 2029:
- All eligible EVs under the LCT threshold receive a 25% FBT discount, with no current end date.
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