EV incentives in Australia

UPDATE: The NSW EV Rebate ends on December 31, 2023, and the Sydney Morning Herald reports that less than half have been redeemed. According to the report, at the start of December data showed 10,229 $3,000 EV rebates had been paid out, and a further 931 were being processed, leaving more than 13,000 rebates worth $42 million unclaimed.

While electric vehicle (EV) uptake in Australia is growing at a rapid pace, EVs (electric vehicles) only represented about 3 per cent of new car sales in 2022. However, with EV market share reaching 7.4 per cent in the first half of 2023, EV uptake is gathering speed. 

So, as the country seeks to reduce overall emissions, what are governments doing to encourage buyers to make the switch to electric? 

Federal EV incentives

• Luxury cars imported into Australia and valued at more than $76,950 for the 2023-2024 financial year are subject to the luxury car tax (LCT.) The LCT threshold for fuel efficient cars (including zero emissions vehicles, or ZEVs) is higher at $89,332, to encourage higher uptake of low and zero tailpipe emissions vehicles.  
• As of July 2022, all customs duties have also been removed for battery electric vehicles (BEVs), plug-in electric vehicles (PHEVs) and hydrogen fuel-cell vehicles (FCEVs) with a dutiable value under the LCT threshold, except for vehicles from Russia and Belarus which attract a 35 per cent duty. 
• Additionally, the 2022 Electric Car Discount Bill exempts zero or low tailpipe emissions vehicles below the LCT threshold from Fringe Benefits tax (FBT). This opens up novated leasing for employees, which without the FBT makes EVs far more affordable.

New South Wales

• Note: On 22 September 2023, the NSW government announced it will phase out the electric vehicle rebate as of 31 December 2023. Instead, it will inject more funding into EV charging infrastructure. More info can be found here.
• From 1 September 2021, the NSW Government introduced a rebate of $3,000 for the first 25,000 new BEVs and FCEVs categories such as passenger vehicles, sports utility vehicles, light trucks, and light commercial vehicles. August 2022 guidelines can be found here. 
• Vehicles purchased under a novated lease are not eligible for the rebate, nor can the rebate be used for trailers, caravans, airplanes, boats, or any other vehicle not included in the eligible categories.
• Dealer demonstrator vehicles are not eligible for the rebate, and dealers cannot claim the rebate for the purchase of such vehicles. To be eligible for the rebate, the vehicle must be registered for the first time on or after 1 September 2021. Vehicles registered before this date are not eligible.
• New and used EV purchases under $78,000 are exempt from stamp duty. 
• Together, the two incentives save EV buyers an average of $5,540 per vehicle.  A list of eligible vehicles can be found here.

Australian Capital Territory 

• Until June 30, 2024, all new and used zero emissions vehicles are eligible for two years free registration. For more information visit here.
• New zero emissions vehicles including cars, motorcycles, utility and light commercial vehicles are exempt from stamp duty. 

Victoria 

• In May 2021, Victoria launched a $3,000 rebate for all new EVs bought for less than $68,740. It was initially available for 20,000 new ZEVs or until May 2024. However, the program was prematurely closed on June 30, 2023, with little more than 10,000 rebates claimed. 
• All ZEVs are exempt from luxury vehicle rates of stamp duty and instead are charged a flat rate of $8.40 per $200 of market value regardless of purchase price.
• From July 1, 2021, ZEVs and other low plug-in hybrid vehicles receive a $100 annual discount on vehicle registration. This discount does not apply to all-electric heavy vehicles and motorcycles. 

Queensland EV incentives 

• From April 21, 2023, Queensland doubled its $3,000 rebate for new EVs to $6,000 and raised the purchase price threshold to $68,000. Businesses may be eligible for a $3000 rebate. Program details are available here. 
• Electric and hybrid vehicles receive a 33% discount on stamp duty, with a rate of $2 per $100 of sales value (up to $100,000) and $4 per $100 if it is over that value. This is compared to a stamp duty of up to $6 per $100 for higher emission vehicles. More information can be found here. 

South Australia

• From October 2021, South Australia introduced a $3,000 rebate and three years free registration for the first 7,000 battery electric or fuel cell (hydrogen) vehicles valued at less than $68,750. As of August 14, 2023, 1,400 rebates were still available. More information can be found here. 

Western Australia

• From July 2022, Western Australia introduced a $3,500 rebate for the first 10,000 buyers of new ZEVs including BEVs and FCEVS for vehicles with a dutiable value of $70,000 or less that are licensed for road use. For more information visit here.

Tasmania

• Tasmania currently has no electric vehicle uptake incentives in place. 
• From July 1, 2021, and until June 30, 2023, there was a two-year stamp duty waiver for all new and used EV purchases, regardless of price. 
• In this two-year period, Tasmania also waived registration fees for all-electric vehicles used in hire and drive services. 

Northern Territory

• For five years from July 2022, buyers of new or used EVs, fuel-cell and plug-in hybrids receive a $1500 discount in stamp duty for vehicles with a dutiable value of up to $50,000.
• For the same period, new and existing BEVs and PHEVs also receive free registration. This includes previously registered, interstate-transferred, and imported or modified EVs. 
• Until June 30, 2024, homeowners and businesses can apply for $1,000 and $2,500 respectively to buy and install an electric vehicle charger. More information can be found here. 

Taxes on EVs to be aware of

While there are a raft of incentives to encourage you to purchase an EV, there are some additional taxes you should be aware of. The following states have announced or already implemented additional road use taxes to offset the loss of fuel excise income from EV drivers.

• New South Wales: From July 1, 2027, or when EVs make up more than 30 per cent of all new cars sold in NSW, the state will introduce an EV road user charge (RUC) to compensate for the reduction in fuel excise revenue. Plug-in hybrids will also pay a reduced charge and fuel excise. The RUC is indexed to CPI (Consumer Price Index) each year, with the 2022-2023 financial year rated at 2.610c/km for BEVs and FCEVs and 2.088c/km for PHEVs. 
• South Australia: Once EVs comprise 30 per cent of new vehicle sales in South Australia, or by July 2027, SA will also introduce a road user tax on EVs that will gradually offset the fuel excise tax as more consumers buy them. The initial proposed rate in 2021 was 2.5c/km for BEVs and FCEVS and 2.0c/km for PHEVs, equal to between $300 and $375 for someone who drives 15,000 a year. 
• Victoria: Controversially, Victoria has already implemented a road user charge for EV owners. Initially, the rate was 2.5c/km for BEV and FCEV owners, with a separate charge for PHEV owners of 2.0c/km which is already in effect. However, from July 1, 2023, the rate has increased to 2.8c/km for BEVs and FCEVs, and to 2.3c/km for PHEVs. More information can be found here. 
• Western Australia: From July 1, 2027, WA will introduce a new distance-based road user charge of 2.5c per kilometre for BEV and FCEV drivers (2c/km for plug-in hybrid vehicles) 

Queensland, Tasmania, the Northern Territory and ACT have yet to announce their own road use taxes however, have not ruled them out for the future.