“Choosing to leave Australians exposed”: North Shore MP rails against EV tax changes

Representing Australia’s electric vehicle capital, Bradfield MP Nicolette Boele claims federal Labor’s pivot on electric vehicle (EV) policy will “leave Australians exposed” to “global price shocks”.

What is changing?

Fringe Benefits Tax (FBT) is a tax paid by employers on certain benefits provided to their employees. This includes the leasing of a company vehicle.

Since July 2022, company cars that are zero or low emissions (not including luxury vehicles, deemed to be those over $91,387) have been exempted from this tax.

Employees will typically pay for these leases via salary sacrificing (reducing their taxable income). Depending on the car, this can result in thousands of dollars in savings for the employee.

The scheme also has the secondary effect of pushing more electric vehicles onto the second-hand car market. 

“We either reduce our reliance on petrol and diesel, or we stay exposed to global price chaos,” Boele said in a statement. “[This] announcement shows that this government is choosing to leave Australians exposed.

"All signs point to electrifying our transport sector. The Government should be supporting that aim, not making it harder for Australians to benefit from it.”

Dr. Chalmers and his scissors

Labor has previously cast doubt on the scheme’s future, with a review announced in December. In a media release on Tuesday, Jim Chalmers said the tax break would be scaled down.

In April 2027, the scheme will reduce the price limit of an eligible EV to $75,000 or less. This would take some Tesla and BMW models off the table. 

Chalmers argues that since the scheme was established, many electric vehicles in the low-to-mid price range have hit the Australian market. 

The nitty gritty

EVs valued from $75,001 and $91,387 will receive 25 percent off their FBT bill.

In 2029, the tax break will be reduced to 25 percent for all non-luxury electric vehicles.

A 2026 Productivity Commission report found the tax was effective at getting more electric cars on the road, thereby reducing emissions. But it found its high cost — forecast to be $1.35 billion this financial year — meant the government might not be getting bang for its buck.

• In March, second hand car auctioneer Pickles Auctions told the Lorikeet many of the electric vehicles it sold came from company fleets purchased under the FBT scheme.

Boele describes the current global situation as “a fuel crisis with long shadows”.

Focus on fossils

The MP says Chalmers should instead be looking at mining companies receiving breaks for diesel under the Fuel Tax Credit Scheme. 

The federal Climate Change Authority has identified the need for five million EVs on Australian roads by 2035 — around 20 times current levels — to meet climate targets.

Thumbnail: Michael Förtsch via Unsplash