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Lack of EV Incentives in Australia

GrimRe

Member
Aug 18, 2019
173
163
Sydney, Australia
Apologies if this a bit of a detailed question and somewhat rant but... Is anyone else pissed off at the active disincentive to buy an EV for a business?

I understand the principal in Australia is that if you are buying a $100k+ car then you must be so wealthy that paying a few extra tens of thousands isn't a big deal, but that's just plain wrong for most businesses that any financial acumen.

I see the gaps for business buyers in the following ways:

Luxury Car Tax on EV is against the common good--
The only federal level incentive I can see (if you can even call it that) is the LCT threshold is slightly higher because a Tesla is considered a "fuel efficient vehicle".

Say what you will about Teslas and EVs in general but one thing is categorically true-- they have zero tailpipe emissions. This has significant societal benefit in that it doesn't cause local air pollution and is therefore conducive to a healthier environment for all. I for one am happy as a tax payer to subsidise a parent at my kid's school buying a Model X over an Audi Q7 insofar that they are not paying LCT on the Model X.

The Audi over its lifetime, no matter how fuel efficient, will emit pollution that is completely unaccounted for and somebody at some in the future will need to pay for it.

Fringe Benefit Tax Law ruins the chance for EV company cars
If you work for a company that provides you with a nice passenger vehicle to do your job which you also use privately-- this is considered a fringe benefit and the ATO rightly wants this benefit to be taxable.

The way this is calculated is the employer essentially takes the original purchase price (including the above Luxury Car Tax), deducts any operational costs and pays a certain percent of the difference as additional tax per year straight to the ATO.

The problem of course is that EVs are relatively high upfront cost and extremely low operational cost. This makes the FBT on Teslas VERY expensive. I can't think why any employer agreeing to take on this additional tax burden.

What's more is that it disincentives an employee getting rooftop solar to charge their car, or using off-peak rates for example as any effort to reduce operational costs simply increases the FBT taxable amount.

Abolish LCT and FBT for any pure-EV ! This is the only way to make it attractive to businesses !

Example:

Purchase price

Model X: $140,515 + $18,885 LCT = $159,400
Audi Q7: $119,990 + $15,375 LCT = $135,365

(Removing LCT alone would make a huge difference to incentivising high end EV ownership)

FBT calculation:
Model X: $160k base price - $5k operational costs) = $27k of extra taxable "income" per year for the business
Audi Q7: $135k base price - $15k operational costs = $12k of extra taxable "income" per year for the business

So all in all, buying a Q7 would be $10k cheaper upfront AND ~$5k cheaper expensive in taxes for a business to consider.
 
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paulp

Active Member
Jul 23, 2015
2,680
1,221
Adelaide, Australia
No tesla’s should not be subsidised or further incentivised. That will just confirm the general perception about electric vehicles that they arent paying their way with no petrol tax.
To gain added advantage, claim the cents per km method, noting there is minimal maintenance and you might fill up either at work or at a free supercharger. Petrol cars dont have this tax advantage or saving.
To negate fringe benefits tax is easy...ask your accountant about driver contribution.
 

GrimRe

Member
Aug 18, 2019
173
163
Sydney, Australia
No tesla’s should not be subsidised or further incentivised. That will just confirm the general perception about electric vehicles that they arent paying their way with no petrol tax.
To gain added advantage, claim the cents per km method, noting there is minimal maintenance and you might fill up either at work or at a free supercharger. Petrol cars dont have this tax advantage or saving.
To negate fringe benefits tax is easy...ask your accountant about driver contribution.

Its petrol cars that are today being subsidised by unaccounted impact on society through (especially diesel) emissions.

If people want EVs to contribute to road maintenance then change the mechanism so that all drivers (include ICE) pay a yearly contribution based on KMs driven (on top of the petrol excise).

LCT on an EV serves no purpose but to dissuade wealthy buyers from EVs. Currently you can't buy cheap EVs so that's the only lever we have.

driver contribution defeats the purpose to some degree but I hear what you are saying ;)
 
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DOMn8

Member
Oct 10, 2019
29
14
Sydney
Its petrol cars that are today being subsidised by unaccounted impact on society through (especially diesel) emissions.

If people want EVs to contribute to road maintenance then change the mechanism so that all drivers (include ICE) pay a yearly contribution based on KMs driven (on top of the petrol excise).

LCT on an EV serves no purpose but to dissuade wealthy buyers from EVs. Currently you can't buy cheap EVs so that's the only lever we have.

driver contribution defeats the purpose to some degree but I hear what you are saying ;)

An employee contribution completely defeats the purpose - it just means that instead of paying FBT on the benefit provided, the employer pays income tax on the employee contribution it receives. Like any other luxury vehicle, the business only gets a depreciation deduction up to the limit of about $58k, but FBT or employee contribution is based on the entire cost.

The disincentive to purchase EV's pisses me off greatly too.
 

paulp

Active Member
Jul 23, 2015
2,680
1,221
Adelaide, Australia
An employee contribution completely defeats the purpose - it just means that instead of paying FBT on the benefit provided, the employer pays income tax on the employee contribution it receives. Like any other luxury vehicle, the business only gets a depreciation deduction up to the limit of about $58k, but FBT or employee contribution is based on the entire cost.

The disincentive to purchase EV's pisses me off greatly too.

It depends on your tax rates. The system is designed to negate employee contribution to the highest tax payers only. Agree that the $58k limit is lopsided and unfair. I think it also applies to a gst rebate limit as well.
 

Blue heaven

Fair Dinkum Tesla
Nov 25, 2014
1,145
1,369
South West Australia
Not use posting on an EV forum that EVs need a purchase incentive in Australia, its best you get on the email and contact every politician you can think on and tell the politician, and I'll put this in capitals, ITS GOOD FOR THEM POLITICALLY, for instance EVs reduce air pollution that in turn massively reduces health costs, and secondly an EV charges from local power, ICE vehicles are fuelled from imported oil, as a country we have a major issue with fuel storage, energy security is a big issue that needs urgent attention.
 

moa999

2020 3 SR+ MSM
Mar 4, 2020
622
429
Sydney, AUS
EVs already have a threshold that is ~$9000 higher saving pretty much every Tesla buyer $3000 in LCT.

Then relative to many countries our fuel tax is high and registration low (already calls to change this).

Could they do more. Yes, but equally they could do a lot less. And it's not like any of our governments are running surpluses for the future.
 

Stratman

Member
Sep 17, 2018
210
214
Melbourne Australia
The only incentive we need from the gov is to ban ICE from 20XX. We always had the possibility to do more than just dig holes in the ground but unfortunately Aus manufacturers like Ford , Holden and their CEO's and leadership teams had no vision to do anything about it or secure their own future. They were happy just became the next Kodak.
 

EcoCloudIT

Active Member
Aug 24, 2015
1,151
412
Melbourne, VIC
All because we have folks down in Canberra who are as creative and innovative as a chunk of coal and every 3 years or so we get to vote one lot in over the other

As an ex-Canberran I can assure you the 'people down in Canberra' from parliament don't live in Canberra....as a matter of fact Canberra is doing the most out of all states re pushing EV.
 

jamesgo

Member
Nov 18, 2019
229
145
Australia
You're also missing the other part of the equation which is the sale price and depreciation. So far Tesla's have had lower depreciation than ICE vehicles.

So yeah, higher upfront, but lower on-going costs and as already outlined above, you're not paying petrol excise so the other option is to discount the front-end price and then pay a per km rate to pay for road maintenance.
 

QBN_PC

Member
Feb 11, 2020
222
219
Queanbeyan
you're not paying petrol excise so the other option is to discount the front-end price and then pay a per km rate to pay for road maintenance.
Stuff that, cars aren't heavy enough to damage the roads. And the feds (who collect the excise) don't pay to maintain the roads anyway.

Just rebrand the petrol excise as a respiratory levy & be done with it.
 

Fazza

Member
Nov 5, 2019
152
43
Sydney, Australia
As an ex-Canberran I can assure you the 'people down in Canberra' from parliament don't live in Canberra....as a matter of fact Canberra is doing the most out of all states re pushing EV.
oh sorry I just read my post.. didn't mean the good folks who live there. Haha meant the pollies.. and yes if only Fed and NSW could take some tips from the act government..
 

OzVic

Member
Jun 20, 2019
129
153
Australia
Just got my rego renewal and although we get penalised for the weight we get a discount of 10% for fuel efficiency.

Where does it say that? I've just renewed mine for $504. Registration fee $67, Motor Vehicle Tax $437.

edit: Actually just used RMS rego calculator and comes to $541 so just under 10% disc.
 
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