How the tax man can help pay for your EV

There were so many electric and green vehicle incentives available to consumers in the past.

Free rego, waived stamp duty and rebates comprised the guts of most state and territory plans, but most of those incentives have been wound back now.

But at a national level, the federal government remains committed to promoting the uptake of zero- and low-emission vehicles – battery-electric and fuel-cell electric vehicles.

The federal government’s Electric Vehicle Discount is the one that provides the biggest savings to consumers. It does this by exempting EVs and plug-in hybrid electric vehicles (PHEVs) priced below the current applicable $91,387 luxury car tax (LCT) threshold from the fringe benefits tax (FBT) and the five per cent import duty that is normally payable on internal combustion vehicles.

It should be noted that the threshold figure only applies to ‘fuel efficient’ vehicles – the threshold for internal combustion engine (ICE) vehicles is $80,567… until July 1.

Something else to consider is that from April 1, 2025, plug-in hybrids are no longer eligible for the FBT exemption, unless they were exempt previously and the owner remains financially committed to providing the vehicle as a fringe benefit for an employee.

Furthermore, it’s anticipated that the federal government will pull the plug on the exemption for battery-electric vehicles too… possibly as soon as 2027.

According to the Electric Vehicle Council, employees buying an EV on a novated lease could save themselves between $3000 and $5000 on income tax each year. Businesses could reduce the cost of running an electric vehicle by up to $10,000 after factoring in the FBT exemption.

The government’s National Electric Vehicle Strategy estimates that the FBT exemption would deliver around a $9000 saving on a $50,000 vehicle, and individuals salary sacrificing their vehicle via a novated lease can save up to $4700 per annum.

These figures work out to save consumers around $23,500 over a five-year lease period, when compared with a similarly priced ICE vehicle.

Such savings allow consumers the opportunity to buy a considerably higher-spec (more valuable) vehicle and stay within their budget.

The way the numbers crunch you can effectively put something like a Kia EV6 Air – still priced well below the LCT – in your driveway for roughly the same amount as an entry-level Toyota RAV4 (priced around $42,000).

There is that caveat for those contemplating the purchase of a PHEV, however; the ‘halfway house’ powertrains were only included in the strategy to April 1, 2025. If you didn’t buy one during the first three months of this year or earlier, kiss your FBT exemption good-bye.

The good news for EV buyers is that they will soon have an even broader array of eligible vehicles to choose from, given the LCT threshold will rise again come the new financial year – a full list of eligible vehicles at the time of writing is available below.

Even more annual savings are possible due to the lower running and servicing costs of EVs, with the federal government positing an average saving of around $2000 per annum for a typical family.

Factor in a home solar-battery system and the savings increase even further, with data suggesting such a setup will save households around $12,000 in power bills over a 15-year period and potentially reduce (individual household) carbon emissions by more than 80 per cent.

If by some measure you’re not interested in acquiring an EV via a novated lease and would rather spend the cash outright or finance your new zero-emissions car, our state-by-state EV incentive wrap will outline what is on offer – although the pickings are slim these days.

A growing number of institutions offer ‘green’, ‘low-emission’ and ‘fuel efficient’ vehicle-specific finance packages.

Abarth 500e
Audi Q4 e-tron
BMW iX1
BMW iX2
BMW iX3
BYD Atto 3
BYD Dolphin
BYD Seal
BYD Sealion 7
Chery E5
Cupra Born
Cupra Tavascan
Deepal S07
Fiat 500e
Ford E-Transit
Ford Mustang Mach-E
Geely EX5
Geely Farizon SuperVan
GWM Ora
Hyundai Inster
Hyundai IONIQ 5
Hyundai IONIQ 6
Hyundai Kona Electric
Jeep Avenger
Kia EV3
Kia EV5
Kia EV6
Kia Niro EV
LDV eDeliver
Leapmotor C10
Lexus UX300e
Mercedes-Benz EQA
Mercedes-Benz EQB
MG S5
MG4
MINI Aceman E & SE
MINI Cooper E & SE
MINI Countryman E & SE
Peugeot E-308
Peugeot E-Expert
Peugeot E-Partner
Polestar 2
Polestar 4
Renault Kangoo E-Tech
Renault Megane E-Tech
Skoda Elroq
Skoda Enyaq
Skywell EC11 E-CARGO
Skyworth BE11
smart #1
smart #3
Tesla Model 3
Toyota bZ4X
Volkswagen ID.4
Volkswagen ID.5
Volkswagen ID.Buzz
Volvo C40 Recharge
Volvo EC40
Volvo EX30
Volvo EX40
Xpeng G6
Zeekr X

*Not all variants of every model listed are eligible due to being above the LCT threshold; list is current at the time of writing