The automotive sector is transforming to become more sustainable, with governments around the world incentivising electric vehicle (EV) adoption to reduce harmful emissions caused by internal combustion engines (ICE).
However, EVs are still generally more expensive to purchase than ICE vehicles, which means that you will need to secure good electric car loan financing.
Thankfully, the Australian government has put in place a series of incentives to make it easier to afford EVs. This makes it more attractive for both private buyers and environmentally conscious businesses that wish to invest in new vehicles.
Let’s review some of these federal EV incentives here:
Exemption from Fringe Benefits Tax (FBT)
The FBT exemption is one of the most significant benefits granted by the Australian government to purchasers of either low- or zero-emission vehicles, which includes EVs and plug-in hybrid electric vehicles (PHEVs).
However, it should be noted that, when it comes to PHEVs, this exemption is valid for a limited time only, so if you wish to take advantage of it, you have until April 1, 2025.
The FBT exemption applies to any EV purchased and first used after July 1, 2022, and is designed to significantly reduce the overall cost of owning an EV when financed through a novated lease arrangement.
If your EV or PHEV is valued up to the luxury car tax (LCT) threshold, you will be eligible for the FBT exemption. In the 2024/25 financial year, this threshold is set at $91,387.
No Import Tariff
Previously, all imported cars were subject to a 5% import tariff. However, this has now been removed for EVs. This makes it more affordable to purchase EVs manufactured outside of Australia.
Like the FBT exemption, only EVs under the value of the current LCT threshold of $91,387 qualify for the 0% import tariff.
This threshold will be revised in the next financial year.
Higher LCT Threshold for EVs
The $91,387 LCT threshold for EVs is significantly higher than the LCT threshold for ICE vehicles, which has been set at $80,567 for the 2024/25 financial year.
This means that EV buyers can confidently spend more on their vehicles without having to worry about the added tax burden, which can be substantial when purchasing a more expensive car.
Since EVs currently still have a higher price tag than ICE vehicles, the higher LCT threshold helps to even the playing field a little, making EVs more affordable.
If you are interested in purchasing an EV and are looking for the best car loan finance options, contact iCREDIT today. We can help you find the best financing deals to suit your budget.