PHEV tax benefit about to be axed

Despite an incoming glut of plug-in hybrid utes, it’s looking highly unlikely the money-saving PHEV Fringe Benefits Tax exemption will be extended beyond April 1 2025.

While an extension is supported by the federal government it does not have the numbers in the Senate to overturn the April 1 sunset clause.

As originally proposed, the Electric Car Discount bill offered fringe benefits tax exemption for both battery electric vehicles and PHEVs priced under the Luxury Car Tax threshold and purchased via a novated lease.

This, in turn, reduces the real-world costs of buying a PHEV.

But support for the bill from the Greens and ACT independent David Pocock in the Senate required the addition of the sunset clause for the PHEV tax exemption.

The exemption is estimated to save tens of thousands of dollars?over a multi-year lease across both employer and employee.

There’s no doubt it has contributed to a 100 per cent climb in in PHEV sales year-on-year (albeit off a low base to just over 20,000) to the end of November.

But the FBT exemption has also coincided with the arrival of the petrol-electric BYD Sealion 6. The Chinese medium SUV is priced equivalently with the Toyota RAV4 plug-less hybrid and has since June sold 5076 examples.

Incoming Chinese rival Jaecoo will line up directly against the Sealion 6 with its J7 PHEV in March 2026.

But the big deal is the incoming fleet of PHEV utes led by the BYD Shark 6 that has already accrued about 4000 orders, along with the GWM Cannon Alpha Hi4T and the Ford Ranger PHEV.

Ford has also announced it will add the Transit Custom PHEV to its line-up while axing the Ford Puma Gen-E EV.

BYD, Ford and Mitsubishi – which has been a long term PHEV advocate with the Outlander SUV – are among manufacturers known to have lobbied for the exemption to be extended.

BYD is even launching a podcast designed to fight what it calls “misinformation” and “scaremongering” about PHEVs.

The federal minister for climate change and energy Chris Bowen has already signalled a willingness to extend the PHEV exemption.

“Not everyone’s ready to buy an EV, a full EV. Some people are looking to buy hybrids first as part of their journey, depending on their own circumstances,” he told the Australian Financial Review earlier this year.

“[On] all our policies, whether it is [emissions] standards or tax cuts, it’s about providing better choices for people.”

It is understood the federal government would be prepared to revisit the exemption if it is returned to government in 2025 and depending on the make-up of the parliament.

Industry associations such as the Motor Traders Association of Australia (MTAA) and the National Automotive Leasing and Salary Packaging Association (NALSPA) have been outspoken in their calls to extend PHEV exemptions.

“The decision to end the FBT exemption for plug-in hybrid electric vehicles couldn’t have come at a worse time, especially as a range of hard-to-electrify utes are just entering the market,” said MTAA CEO Matthew Hobbs.

“Consumer acceptance of these vehicles will take time, and the FBT exemption is a ready-made solution to accelerate the transition to lower-emission vehicles.”

But Pocock, who originally proposed the sunset clause, remains resolute in his opposition to its overturn. His fundamental argument is the government should not subsidise petrol cars.

“More Australians should enjoy the benefits of owning an electric vehicle, including much lower fuel costs, lower maintenance costs and a better driving experience,” he said.

“Bold and decisive action is needed to address high EV prices, a lack of supply and insufficient charging infrastructure”.

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