Electric car owners dodge road charge but pay more tax
Australia’s electric car drivers could avoid road user charges for another year but will pay more tax under measures announced in the federal budget.
The changes are part of several reforms to support low-emission vehicles in the budget, including an expansion of the electric car repair scheme, funding support for Australia Post’s electric fleet and charging stations in regional areas.
The announcements come after record-breaking electric vehicle sales in March and April, driven by shortages and price increases in gasoline prices.
The government confirmed changes to the electric car rebate in budget documents and said it would collect a further $1.95 billion in fringe benefit taxes from drivers over the next four years.
The full tax credit will only apply to electric cars purchased under renewed leases valued at $75,000 or less from April 2027, with a 25 per cent fringe benefit tax credit for all electric vehicles below the luxury car tax threshold from April 2029.
Finance Minister Jim Chalmers said making the rebate a permanent budget measure would increase the adoption of electric cars while also ensuring the scheme does not implode.
“We will create more sustainable long-term environments to support the proliferation of electric vehicles,” he said.
According to one review, drivers bought 330,000 electric cars at a discount in the first three-year period; these include 78,000 low-emission vehicles that would otherwise be unaffordable.
Road user charging for electric vehicle drivers has been suspended, as recommended by the Economic Reform Roundtable, while the federal government develops a policy with state and territory governments.
A similar annual road charge for electric and hybrid vehicle drivers in Victoria was rejected by the Supreme Court in 2023 and another has been proposed for NSW drivers in 2027.
Other commitments to electric vehicles include a one-year extension of an initiative supporting the sale and service of cars at dealerships and repair shops, and an additional $40.5 million to electrify Australia Post’s fleet of delivery vehicles.
An additional $40 million will also be spent on electric vehicle charging stations and curbside charging in regional blackspots.
