Electric Car Discounts
The Electric Car Discount remains one of the most valuable concessions available for employee vehicles -- and a review is the right time to ensure your strategy is watertight.
Electric Car Discounts
What it means for your Business
Electric vehicles (EVs) are nolonger a niche choice. For many businesses and employees, the FederalGovernment's Electric Car Discount (introduced in mid-2022) has materiallyreduced the cost of owning or leasing an EV through tax concessions.
The rules are now understatutory review. While no immediate changes are proposed, this is an importantmoment to understand the current benefits, assess whether they suit yourcircumstances, and consider the timing of any purchase.
How the Electric Car Discount works
The discount is not a cashrebate. Instead, it operates through tax concessions that can significantlyreduce the real cost of an EV:
1. Fringe Benefits Tax (FBT) exemption
Where an eligible EV is providedto an employee as a fringe benefit, private use is exempt from FBT. Without theexemption, FBT is effectively charged at up to 47 per cent.
Key points to note:
- The exemption applies to battery electric vehicles andhydrogen fuel cell vehicles.
- Plug-in hybrid vehicles lost eligibility for newarrangements from 1 April 2025.
- The car must be first held and used after 1 July 2022and be below the luxury car tax threshold at first purchase.
2. Higher luxury car tax (LCT) threshold
Fuel-efficient vehicles,including EVs, benefit from a higher LCT threshold. This can prevent the 33 percent luxury car tax applying to part of the purchase price.
3. Reduced import costs
Certain EVs may also be exemptfrom the 5 per cent customs duty, reducing upfront acquisition costs.
Why the Government is reviewing the rules
A statutory review of theElectric Car Discount has commenced, with public consultation now open. Thereview will examine the operation of the discount, whether it remainsappropriately targeted, and how it interacts with other policies. At thisstage, there is no suggestion of immediate changes -- any reforms are morelikely to be prospective.
Practical takeaways
- Review your timing -- if you are considering replacinga vehicle in the next 12 to 24 months, now is a good time to revisit your plan.
- Check eligibility carefully -- confirm the vehicle isunder the LCT threshold and meets the FBT exemption criteria.
- Do not assume related benefits apply automatically --charging infrastructure provided alongside an eligible EV will not necessarilyqualify for an FBT exemption.
- Existing arrangements are unlikely to changeretrospectively.
If you are considering an EV --either personally or through your business -- now is the right time to run thenumbers. Please contact our team for tailored advice on whether an electricvehicle strategy makes sense for you under the current rules.
