Labor extends EV tax break to encourage cheaper vehicles amid soaring fuel prices

Labor has opted to retain its electric vehicle discount in full for another year, as Australians rush to buy EVs amid soaring fuel costs linked to the Iran war. But the budget next Tuesday will include a number of “sensible changes” that wind back the scale of support over the next three years, as the government acknowledges the need to deliver a “more financially sustainable” tax incentive for EVs amid ballooning costs of the scheme. The electric car discount was introduced at the start of 2023 and has cut thousands of dollars from the cost of leasing an eligible EV through an exemption to fringe benefits tax (FBT). Sign up for the Breaking News Australia email The treasurer, Jim Chalmers, and energy minister, Chris Bowen, announced in a joint statement on Monday evening that the policy would be extended until the end of March 2027. The full FBT discount will then only apply to vehicles costing under $75,000 until the start of April 2029. “The new rules will encourage manufacturers to offer more affordable and cheaper to run EVs in the Australian market,” Chalmers and Bowen said. “The current new vehicle efficiency standards have seen a dramatic increase in the availability of affordable EV models , so now is the right time to focus the FBT exemption on these cars.” During this second phase, electric vehicles costing more than $75,000 but priced below the luxury car tax threshold – currently set at $91,387 for fuel-efficient vehicles – would receive a 25% FBT discount. …