Labor Electric Car FBT discount

[ENORYM]

Hi All,

If Labor win this years election, they will be removing the Fringe Benefit Tax for electric cars under the Luxury Car Tax Threshold.

Electric Car Discount

Cheaper electric cars so that more families who want them can afford them, and to reduce emissions.

www.alp.org.au

So Leasing may be a very viable option for getting a Tesla, especially those earning a higher income.

Thoughts? Discussions?

 

[paulp]

Suggest you read the fine print:
As part of the Discount, Labor will exempt many electric cars from:
note the word ‘many’. So probably just the cheapest two. Its clearly for them to say later “but we didn’t say all”
Election promises from any pollie tend to not happen often.

 

[cafz]

Suggest you read the fine print:
As part of the Discount, Labor will exempt many electric cars from:
note the word ‘many’. So probably just the cheapest two. Its clearly for them to say later “but we didn’t say all”
Election promises from any pollie tend to not happen often.

Suggest you read the very next paragraph:

These exemptions will be available to all electric cars below the luxury car tax threshold for fuel efficient vehicles ($77,565 in 2020-21).

That's what the "many" is about.

 

[Blue heaven]

At this point in time with demand outstripping supply at the present time and for at least the next 2 years I see no point in EV purchase incentives. I would much rather taxpayer money go towards building RELIABLE charging infrastructure in two areas, firstly DC fast charging on major roads between populated areas and secondly AC charging in all the various areas cars are parked for hours on end during the day. This will be of far more benefit to the whole nation over the next decade rather than a few thousand lucky drivers that manage to score an EV in 2022-2023.

 

[Nobody Famous]

So Leasing may be a very viable option for getting a Tesla, especially those earning a higher income.

From the link

If a $50,000 model is provided through employment arrangements, Labor’s fringe benefits tax exemption will save employers up to $9,000 a year. Often FBT is passed on to employees – and those employees will benefit directly from Labor’s policy.

So should be good for Novated Leasing

 

[ENORYM]

So should be good for Novated Leasing

Yeah exactly. Will be interesting to get exact numbers from leasing companies if Labor get in.

 

[Stratman]

At this point in time with demand outstripping supply at the present time and for at least the next 2 years I see no point in EV purchase incentives. I would much rather taxpayer money go towards building RELIABLE charging infrastructure in two areas, firstly DC fast charging on major roads between populated areas and secondly AC charging in all the various areas cars are parked for hours on end during the day. This will be of far more benefit to the whole nation over the next decade rather than a few thousand lucky drivers that manage to score an EV in 2022-2023.

Good point, but doesn't need to be either / or ...... both EV incentives & reliable / expanded charging network should be pursued at the same time. Many of us have friends that are now saying their next car is to be an EV and I'd rather see them in an EV order queue than entertaining the possibility another ICE in the meantime.

 

[Loxmyf]

Australia needs to remove the luxury car tax now. It was introduced to protect car manufacturing in Australia, and with the last of those closing 5 years ago, there's no industry left to protect.

 

[ENORYM]

Australia needs to remove the luxury car tax now. It was introduced to protect car manufacturing in Australia, and with the last of those closing 5 years ago, there's no industry left to protect.

Yeah.. Unfortunately they aren't going to remove anything that makes them money.. 😑

 

[ENORYM]

Copied from another forum I am on:

🧔Doing the numbers with the ALP proposal you should save the tax on the post-tax contribution of 500/fortnight (rounded up from the image). So say your marginal tax rate is 37+2% (base rate + Medicare levy) you would save 39% x $500 == $195/fortnight over the previous novated lease quote, so ~$5000/year. At 45+2% tax you save a little over $6000/year.

An extra 4% interest on $75K is $3000/year, and some of that interest is perhaps pre-tax under the scheme. So you would likely be ahead with the novated lease if the ALP drop the FBT. There is also the up-front GST saving, noting that when you sell the car you have to remit 10% GST on the (secondhand) sale price to the govt.

👨‍🦱 Keep in mind that in 2024 the Stage 3 tax cuts are enacted which removes the 32.5% & 37% tax brackets, moves the 45% bracket up from $180,000 to >$200,000 and sets a flat tax rate of 30% from $45,000 to $200,000.

🧔Good point. Using the figures AndyB threw together above, at 30% tax rate + 2% Medicare it would equal about $160 a fortnight in tax saved, or $4160 a year. That’s getting very close to the approximately $3000 extra to be paid on a higher interest lease loan. Seems may come out a tiny bit ahead still with labor’s policy but we are talking a difference of maybe $1-$2k. Obviously if you’re above $200k then it will be a fair bit better. Most of australia would fall in the $45-$200k though.

 

[Vostok]

Well it looks like these (modest) initiatives will now become law to take effect in 5 weeks’ time, saving private buyers a small-ish amount of money, but the incentives as a result of FBT exemption will be considerable for people who take advantage of such arrangements.

Supply is still a big issue, particularly without imposing vehicle emissions standards which the ALP squibbed in a quite cowardly fashion. But at least the rhetoric will change, and that might provide some confidence to the manufacturers of a more positive environment ahead.

The promise to work with the states on EV charging infrastructure is welcome. There are now so many different EV charging programmes and initiatives among the states and other stakeholders like motoring organisations that there is a lot of scope for coordination and alignment so that people aren’t treading on each other in the rollout. The money that is spent should result in a well thought out and optimal distribution of chargers and not everyone chasing to plonk their chargers in the same spot.

The promise to consider “ways to address the policy implications of declining fuel excise” may result in a national RUC - or at least a consistent one - but I doubt any state will give up a source of revenue they now control. Due to the Morrison policy vacuum (ignore it, or even demonise it, and it will go away) the states pounced and that ship has sailed.

 

[cafz]

Well it looks like these (modest) initiatives will now become law to take effect in 5 weeks’ time,

The parliamentary sitting schedule hasn't been created yet, the new Senate won't sit until July 1 - it seems like a very tight timeframe.

 

[Vostok]

The parliamentary sitting schedule hasn't been created yet, the new Senate won't sit until July 1 - it seems like a very tight timeframe.

Presumably it will be backdated like the rebates and incentives were in NSW. They took effect from 1 September last year, even though the bill was not signed into law by the Governor until 1 November.

 

[meloccom]

Moderators Note:
As Labor has indeed won the 2022 Federal election I have modified the title to suit.

 

[Quickst]

there's no industry left to protect

Yes there is. There is no politicians/politics without taxpayers money to distribute

 

[positiv]

🧔Doing the numbers with the ALP proposal you should save the tax on the post-tax contribution of 500/fortnight (rounded up from the image). So say your marginal tax rate is 37+2% (base rate + Medicare levy) you would save 39% x $500 == $195/fortnight over the previous novated lease quote, so ~$5000/year. At 45+2% tax you save a little over $6000/year.

An extra 4% interest on $75K is $3000/year, and some of that interest is perhaps pre-tax under the scheme. So you would likely be ahead with the novated lease if the ALP drop the FBT. There is also the up-front GST saving, noting that when you sell the car you have to remit 10% GST on the (secondhand) sale price to the govt.

Over what time period would you set the lease over? My company will let me setup the novated lease over one to five years. Which is better?

 

[Loxmyf]

Over what time period would you set the lease over? My company will let me setup the novated lease over one to five years. Which is better?

Your lease company rep should have gone over the numbers with you (which should change a lot with the new Gov.) For me 3 years was the sweet spot with the M3P. It was a good balance of affordability and tax benefit. 5 year was obviously less outlay per month, but the tax benefit was marginally more than a 3 year lease benefit. Mine was 9.5K benefit on a 3 year lease, but only 10.3K benefit on a 5 year lease. I'll have to talk to my guy again when the new rules come in. I certainly don't expect to have mine by then.

 

[ENORYM]

I am just waiting for the leasing companies to have the updated information before I enquire

 

[Quickst]

The new rules which make FBT zero if the vehicle falls under LCT threshold might make adding the FSD as an aftermarket an attractive option rather than at purchase

 

[moa999]

The new rules which make FBT zero if the vehicle falls under LCT threshold might make adding the FSD as an aftermarket an attractive option rather than at purchase

That's always been the case due to LCT