Electric Vehicle Tax Australia: Taxes are a part and parcel of the Australian economy.
According to an estimate, there were almost 44,000 EVs on Australian roads in the beginning of 2022. The new estimate shows that this amount has almost doubled now to 83,000 and is expected to further increase to 100,000.
Taxes are crucial but it’s just not good to tax electric vehicles since they help in decarbonising transport, which is very beneficial for our environment.
As wisely said by Scott Dwyer:
“Taxes are important but it’s too early to tax electric vehicles in an Australian market still in its infancy.”
In this article, we are going to discuss the electric vehicle tax in Australia, its criteria and conditions, basically all about it. So keep on reading Also Read About increase Gst Australia.
Electric Vehicle Tax
Criteria for Paying FBT
Here are a few factors that decide whether you are going to pay FBT on your electric vehicle or not:
- The car should be used for private purposes.
- The car should be a zero or no emission vehicle.
- The car should be used by a current employee or their acquaintance.
- The luxury car tax (LCT) is not payable on sale or importation of the car.
What is a Zero or No Emission Vehicle?
The following conditions tells whether the vehicle is a zero or no emission vehicle:
- Whether it is an electric vehicle with a battery, with a hydrogen fuel or plug-in hybrid vehicle.
- Whether it is a car which is designed to carry less than 9 passengers or a weight of less than 1 tonne.
What are Road Taxes for Electric Vehicles?
The idea of road tax was first put by the Victorian Government in 2021. According to this scheme, for each kilometre driven in an electric vehicle, drivers must pay a fee each year. These are not some huge charges.
For fully electric vehicles, the tax is charged as 2.8c per kilometre and for plug-in hybrid vehicles, it is 2.3c per kilometre.
The purpose of these charges is to cover for the revenue which is lost from the decrement in fuel excise duty due to increase of the sale of petrol and diesel.
Car Expenses for EVs Exempt from Tax
They following are the car expenses that are exempt from FBT if it is for an eligible electric car:
- Registration of the electric vehicle.
- Maintenance or repair.
- Electricity used to run an electric vehicle.
‘Held and Used’ for Exemption
To access the exemption, the car can be held before 1 July 2022 but can’t be used before it. This means that you are eligible for exemption if you held the car before this date but the car was not available to use before it.
Held means when an electric car is:
- Owned ( includes cars which are under purchase process).
If we talk about a second hand electric vehicle being held and used before 1 July,2022, and then sold to a new owner after it, the car will not be exempt from FBT as it was used before 1 July 2022.
Plug-in Hybrid Electric Vehicles
Under FBT law, plug-in hybrid vehicles will not be considered as zero or no emission vehicles from 1 April 2025.
But if you want to continue exemption, make sure to meet with these conditions:
- To continue exemption, you should use the plug-in hybrid vehicle before 1 April 2025.
- If you have a financially binding agreement of providing the vehicle to someone on and after 1 April 2025, any extension in this agreement is not considered binding.
Electric Vehicle Luxury Car Tax Australia
Luxury car tax is a tax imposed on cars that cross the LCT threshold value. It is imposed at the rate of 33% above the luxury car threshold.
LCT is paid by individuals who import luxury cars or by businesses that sell or import these cars.
The LCT threshold for the financial year 2023-2024 is $89,322 for fuel efficient vehicles and $76,950 for other vehicles.
If you sell or import a car above the LCT threshold, you must pay LCT. The LCT of a car also includes the cost of its parts, accessories or any other material you import with the car.
In this article, we’ve talked about the Electric Vehicle Tax Australia. Australia is undoubtedly quite progressive in terms of tax but taxing electric vehicles is something not considered right as it helps you to reduce carbon footprints and produce zero tailpipe emissions. Learn More About Australian Payroll Calculator.
There should be a fairer way to fund the transport infrastructure rather than taxing EVs as it is not judicially correct.
Moreover, electric vehicles and more such items will evolve at a rapid rate and their taxes will always be a hot topic for the audience. Also Read About Benefits Using Payroll Calculator.
For now, we have given you all the recent details you need to know whether you’re planning to buy an electric vehicle or are genuinely curious!