Electric Vehicle Incentives and Tax Benefits in Australia: Act Before 1 April 2025
Transitioning to electric and hybrid vehicles comes with a host of advantages, including electric vehicle incentives, environmental benefits, and Government-based initiatives. Understanding these incentives can significantly impact your decision to invest in greener technology – and timing is key.
Interest Rate Discounts: Many lenders are now offering reduced interest rates for financing electric and hybrid vehicles. Coupled with Government incentives and grants, the financial case for transitioning to electric vehicles becomes even more compelling. These electric vehicle incentives not only lower the cost but also accelerate your return on investment.
Fringe-Benefit Tax (FBT) on Electric Vehicles
Currently, electric vehicles and plug-in hybrid vehicles are exempt from fringe-benefit tax (FBT), offering significant tax advantages to businesses.
However, starting 1 April 2025, plug-in hybrid electric vehicles will lose this exemption. This change is due to new classifications that no longer recognise plug-in hybrids as zero or low-emissions vehicles under the FBT regulations.
Exemptions for Existing Contracts
If a plug-in hybrid was acquired, or available for use, before 1 April 2025, and there’s a financially binding commitment in place, exemptions may still be applicable. This offers a transitional period for businesses to adjust to the new regulations while still benefiting from current incentives.
To take full advantage of current electric vehicle incentives and tax benefits – especially for plug-in hybrids – it’s critical to act before 1 April 2025 to secure your FBT exemption.
Luxury Car Tax (LCT) on Electric Vehicles
When purchasing a second-hand vehicle, be aware of the luxury car tax (LCT). During the 2024-25 financial year, this tax applies if the vehicle’s value exceeds:
- $91,387 for fuel-efficient vehicles, and
- $80,567 for other vehicles.
For detailed information on LCT and how it might affect your purchase, it is highly recommended to consult the Australian Taxation Office (ATO) website for the latest information on electric vehicles and fringe benefits. We also recommend that you seek advice from your financial advisor and accountant.
Why Finance your EVs with Pacific Finance?
Financing your EVs through Pacific Finance not only comes with the market’s most competitive rates but also access to a network of professionals who can assist in optimising the incentives and rebates, to position your business for a successful and sustainable future.
If you’re ready to make the change to electric vehicles, contact your Pacific Finance Broker today. We can help you make a seamless transition as we understand the specific needs of the capital-intensive industries in Australia, and we can ensure the solutions resonate with your operational requirements and financial goals. We will collaborate with your Accountant to navigate the best financial pathway forward.
Disclaimer: This information is for general information purposes only. The information contained herein does not constitute financial or professional advice or a recommendation. It has not been prepared with reference to your financial circumstances or business and should not be relied on as such. You should seek your own independent financial, legal and taxation advice as to whether or not this information is appropriate for you.