The Federal, State and Territory governments have plans and incentives to encourage the use of EV cars in Australia.
The Labor government which was elected in May 2022 has an “Electric Car Discount” policy taking effect from 1 July 2022, detailed of which are outlined below. The Federal measures are subject to review after 3 years in the light of the rate of electric vehicle adoption.
Labor’s Electric Car Discount
Labor’s Electric Car Discount Policy is aimed at reducing the cost of electric vehicles, and has two components:
- Relief of electric vehicles from the 5% import tariff; and
- Exemption of privately used electric cars provided by an employer from the 47% Fringe Benefits Tax.
With effect from 1 July 2022, under Notice Of Intention To Propose Customs Tariff Alterations Notice (No. 6) 2022 the customs duty on electric vehicles, plug-in hybrid vehicles and hydrogen fuel-cell vehicles with a customs value less than the fuel efficient luxury car tax threshold will have a ‘Free’ rate of duty (except for imports from Russia and Belarus).
FBT Exemption For Electric Vehicles
The Federal Government has passed the Treasury Laws Amendment (Electric Car Discount) Bill 2022. The measures give effect to the FBT exemption for eligible zero or low emissions vehicles which are valued below the luxury car threshold. See Minister’s media release and ATO Fact Sheet: Electric vehicles and fringe benefits tax (Feb 2023).
‘Eligible zero or low emissions vehicles’ are ‘cars’ for FBT purposes, and which are:
- battery electric vehicles;
- hydrogen fuel cell electric vehicles; or
- plug-in hybrid electric vehicles.
The FBT exemption only applies to electric cars that are first held and used on or after 1 July 2022. A car ordered before 1 July 2022 but not delivered until 1 July 2022 or later is capable of being eligible provided other conditions are met, as are car fringe benefits provided under a salary packaging arrangement.
Both the duty and FBT exemptions are restricted to cars costing less than the Luxury Car Tax threshold for fuel efficient vehicles, for which the current (2022-23) threshold is $84,916.
The measures are to be reviewed after 3 years to consider electric car take up, whether the tax concessions should be continued, and if so, in what form.
4.2 Cents Per Km For Electric Cars
Some electric cars are exempt from FBT, but the taxable value is still a Reportable Fringe Benefit.
In order to calculate a taxable value, employee contributions are taken into account, which include the home electricity cost of recharging batteries.
To enable the calculation of home electricity cost for these purposes, the Tax Office has released Draft Practical Compliance Guideline PCG 2023/D1 which provides for a calculation of 4.2 cents per kilometre.
Under the guidelines, the same basis of 4.2 cents per kilometre can be used when working out deductions for an electric vehicle used for business purposes.
The Guideline is to take effect from 1 April 2022 for FBT purposes, and 1 July 2022 for income tax purposes.
Electric Car Discount Cost Savings Example
Labor’s policy document estimates the following savings from the concession on a vehicle costing $50,000:
- $2,000 reduction of import tariffs (5%)
- Up to $9,000 from the reduction in FBT
- Cheaper running and maintenance costs (Nissan estimates $30 per week on its Leaf model).
The car depreciation limit should also be borne in mind. The depreciation limit operates independently of, and is currently less than, the luxury car limit.
Vehicles costing more than the depreciation limit may still fall under the luxury car limit for the proposed EV concession, but the difference will potentially be a lost depreciation claim, or (until 30 June 2023) a foregone amount of outright deduction under the instant asset deduction rules.
Luxury Car (Fuel Efficient) Threshold and Depreciation Limit for 2022-23
|Luxury Car Threshold 2022-23||Depreciation Limit 2022-23||Difference|
Western Australia Zero Emission Vehicle (ZEV) Rebate
Western Australia’s scheme provides a direct rebate of the cost of a zero emission vehicle.
Zero emission vehicles are vehicles powered solely by batteries or hydrogen fuel cells that do not emit greenhouse gases. Hybrids are not eligible.
Features of the scheme include:
- the W.A. rebate is currently paid by EFT as a cash amount to the value of $3,500
- applications are accepted from 10 May 2022 to 10 May 2025, subject to a limit of 10,000
- payments commence 1 July 2022
- the scheme applies to new light vehicles (4.5 tonne or less) with a maximum dutiable value of $70,000 or less and licensed for road use.
- application form (form E120) is available online and may be lodged by mail or email
Further information: Zero Emission Vehicle (ZEV) Rebate
NSW Rebates For Electric Vehicle Purchases
Announced in the NSW Budget of 2023 for 2023-24, from 1 January 2024, the exemptions and rebates for stamp duty on the purchase of electric vehicles (EVs) will no longer be available.
Additionally, from 1 January 2024, all zero and low-emissions vehicles, including plug-in hybrids, that are registered or transferred will be required to pay the Road User Charge. This will begin on the earlier of 1 July 2027 or when EVs account for 30% percent of new vehicle sales.
The current subsidies on contracts signed before 1 January 2024 will remain.
The funds generated from these measures, amounting to $260 million, are to be allocated to a revised EV Strategy.
The NSW scheme provides a direct rebate on the purchase of new battery electric and hydrogen fuel cell vehicles. Hybrid vehicles are not eligible.
Features of the scheme include:
- the NSW rebate is paid as a cash amount of $3,000 and an exemption from stamp duty
- the scheme commenced for newly registered vehicles from 1 September 2021 and is subject to a limit of 25,000 eligible vehicles.
- the scheme applies to battery electric vehicles (BEVs) and hydrogen fuel cell electric vehicles (FCEVs), primarily light vehicles with a dutiable value of less than $68,750 and licensed for road use. There is a list of vehicles here.
Further information and online application registration details here.
Queensland Zero Emission Vehicle Rebate Scheme
The Queensland rebate scheme is designed to encourage the purchase of Zero Emission Vehicles (“ZEV”) by Queensland residents and businesses.
‘Zero Emission Vehicle’ refers to a full battery electric vehicle and does not include hybrids.
[news April 2023] The cap value has been increased to $68,000 and the value of the rebate doubled to $6,000.
Features of the scheme include:
- the Queensland scheme provides a direct rebate of $3,000 on the purchase of a new Zero Emission Vehicle.
- the scheme applies to light passenger and light commercial ZEV models with dutiable value of up to $58,000 (including GST and excluding statutory fees and duty).
- the scheme commenced on 16 March 2022 and will be offered until the allocated funding of $45 million has been exhausted.
Further information and online rebate application details are here.
Victoria’s Zero Emissions Vehicle (ZEV) Subsidy
The Victorian ZEV subsidy is designed to reduce the upfront cost of purchasing an eligible zero emissions vehicle. Unlike various other schemes, the Victorian subsidy is applied at the point of purchase, so the purchaser’s initial expenditure is reduced.
ZEVs have zero tailpipe emissions, and include Battery electric vehicles (BEVs) and hydrogen fuel cell electric vehicles (FCEVs). Hybrid vehicles are not included in the subsidy scheme.
Features of the scheme include:
- the Victorian scheme provides a subsidy of $3,000 on the purchase of a new Zero Emission Vehicle.
- the subsidy is available for eligible ZEV passenger cars purchased from a particpating ZEV trader with a dutiable value purchase price of less than $68,740 (excluding registration and stamp duty, including options, accessories and GST).
- the scheme commenced on 2 May 2021 and has more than 20,000 subsidies available which will be offered for up to 3 years or until fully committed.
Detailed information and application details are here.
Victoria’s ZLEV Road User Charge
On the debit side for electric and hybrid vehicle owners is the ZLEV road user charge, introduced from 1 July 2021 in order to balance the contribution to road infrastructure and maintenance by fossil fuel consumers made through the fuel excise.
ZLEV road user charges from 1 July 2022 are:
- Zero emission vehicles: 2.6 cent/km
- Plugin hybrid eclectrical vehicles: 2.1 cent/km
- Conventional hybrid: N/A
Details of the ZLEV road user charges are here.
High Court Decision Overrules Victoria’s ZLEV Road User Charge
Note: A High Court decision published October 18, 2023 has decided that imposition of the per kilometre tax by the Victorian government was unconstitutional because the states do not have the power to impose such excise taxes on consumption.
The decision has potentially similar ramifications for other states’ plans for an EV tax, as well as for other state-based charges.
Tasmania Stamp Duty & Registration Waivers For Electric Vehicles
Tasmania has two programs to encourage the uptake of electric vehicles:
- A general stamp duty waiver
- A registration payment waiver for all-electric vehicles providing a hire & drive passenger service
The programs apply for 2 years from 1 July 2021.
Tasmania’s Electric Vehicle Stamp Duty Waiver
Tasmania has introduced a stamp duty waiver on the cost of buying an electric vehicle. The waiver applies for 2 years from 1 July 2021.
This is estimated to reduce the cost by around $2,000 on average.
Eligible vehicles (includes motorcycles) must:
- be a light vehicle;
- use one or more electric motors;
- be fuelled from a hydrogen fuel-cell, an off-vehicle electrical power source, a battery or electric generator; and
- not be fitted with an internal combustion engine.
Tasmania’s Electric Hire & Drive Passenger Service Vehicle Registration Payment Waiver
Registration and approval processes for the waiver are set out here.
The payment waiver applies for two years, from 1 July 2021.
ACT Zero Emissions Vehicle (ZEV) Incentives
The Australian Capital Territory has provided three incentive measures to encourage ownership of ZEVs.
- New ZEVs of any value have no stamp duty on the purchase (see stamp duty rates)
- New or used ZEVs purchased from 24 May 2021 and before 30 June 2024 receive two years of free registration (see detailed criteria here)
- Eligible households can access up to $15,000 to buy an electric vehicle under the Sustainable Household Scheme zero interest loans for 10 years. (see Sustainable Household Scheme details)
On July 20, 2022 the ACT Government released details of a re-vamped EV strategy, which includes provision for the phase-out of light internal combustion vehicles by the year 2035.
Features of the strategy include:
- $2,000 grants for installation of EV charging infrastructure for apartment buildings
- expanding the ACT public charging network to at least 180 EV chargers by 2025
- exclusion of new fossil-fueled vehicles from taxi and ride-share fleets by 2030
- continued action to on upgrading Government fleet vehicles with ZEVs
- phasing out light internal combustion engine vehicles by 2035
- aiming for 80-90% of light vehicle sales being zero emissions vehicles by 2030.
See: Media Release
Northern Territory Electric Vehicle Incentives
From 1 July 2022 to 30 June 2027, the NT Government will waive:
- stamp duty fees for the sale of plug-in EVs up to $50,000
- the registration fee
The NT government is also providing funding for a grants scheme available from 1 July 2022 to owners of EVs to buy and install EV chargers.
There are 100 residential grants of $1,000 and 80 business grants of $2,500 provided on a first come first served basis.
This page was last modified 2023-10-18