It’s a Win-Win for the environment and the hip pocket.
Electric vehicles are gaining popularity in Australia as a more sustainable and cost-effective transportation option. In recognition of their environmental benefits, the Government passed the Electric Car Discount Bill 2022. This Bill delivers a number of tax benefits that can help offset the initial cost of purchasing an electric or plug-in hybrid vehicle.
One of the main tax benefits for EVs in Australia is the Luxury Car Tax (LCT) threshold. The LCT is a tax that is applied to cars that are above a certain price threshold. For traditional gasoline-powered vehicles, the threshold is $67,525. However, for EVs, the threshold is significantly higher at $77,565. This means that if you purchase an EV that costs less than $77,565, you will not have to pay the LCT. This can save you a significant amount of money, as the LCT is applied at a rate of 33% on the amount above the threshold.
Furthermore, the bill has made electric cars purchased after 1 July 2022, exempt from FBT. As an employee, this means that you can pay for the car from your gross income, reducing your income tax. By purchasing the electric car on a novated lease, your employer can claim back the GST on your behalf, delivering even greater savings.
As a business owner, no FBT means that the full cost of the vehicle can be deducted as an expense against your income. There is no requirement to declare personal use.
If you are considering purchasing an EV, contact our accounting expert to explore the various tax benefits and incentives that may be available to you.