When considering a new car purchase, it’s essential to understand what costs you’ll incur past the actual sticker price. Things like taxes, registration fees, insurance and maintenance can add up quickly. When buying a traditional car, these costs are relatively straightforward.
However, if you’re shopping for an electric vehicle (EV), things are a little more complicated. When it comes to driving an EV, you’d be forgiven if you couldn’t quite decipher whether the government wants to reward you or tax you for going green. Let’s break down the two, somewhat polarising, types of government programs surrounding EVs.
Electric vehicle incentives
Put simply, if you drive an EV, you’re polluting less. Every time you drive, you’re reducing the impact you have on your environment. Logically, your contribution deserves a reward. To do this, some state and territory governments have introduced incentives to drive people to buy EVs. These incentives may come in the form of tax reductions, a reduction in stamp duty, or a reduction in registration fees.
Electric vehicle road tax / usage charges
On the other hand, governments rely on the taxes people pay at the petrol pump. When you drive an EV, you stop paying tax on petrol altogether. On a large scale, this can create problems for governments who need those tax dollars to build and maintain roads and other driving infrastructure. To combat this, some governments require EV drivers to pay a special EV tax to make up the difference. However, some governments have opted to delay the start of these taxes to help support EV adoption.
Let’s explore which EV incentives and taxes apply where
There are no specific federal incentives for buying or driving an EV. However, there does exist a small incentive to drive a more fuel-efficient vehicle. The luxury vehicle tax is a 33% tax on vehicles that cost more than $69,152. However, that threshold is increased to $79,659 for “fuel-efficient” vehicles. According to the ATO, a fuel-efficient vehicle is one that does not exceed seven litres of fuel per 100 kilometres.
Electric vehicles incentives by state
With no significant taxes or incentives on a federal level, the state or territory you live in will have a more direct impact on the savings and costs that come with your EV.
Australian Capital Territory
With just over 1,000 EVs registered in ACT, there’s plenty of room for the industry to grow. ACT grants EV buyers a full stamp duty exemption on new EVs as well as two years of free registration on new or used EVs.
To qualify for the stamp duty exemption, vehicles must be purchased brand new and produce no emissions. Zero-emissions vehicles purchased new or used before 30 June 2024 are eligible to receive two years of free registration.
As one of the states with the largest existing EV charging infrastructure, it’s no surprise NSW offers strong incentives. NSW grants EV buyers a full stamp duty exemption on the purchase of a brand new EV that costs less than $78,000. It also offers a $3,000 rebate on EV purchases that cost less than $68,750. Altogether, this means EV buyers in NSW can save up to $5,540 over the costs of buying a comparable traditional vehicle. Keep in mind, only the first 25,000 EVs purchased in NSW after 1 September 2021 qualify for the rebate.
Once EVs make up 30% of the vehicles on the road, (or on 1 July 2027, whichever comes first) NSW will implement a road user charge – also known as a tax – for EV drivers. The charge will cost drivers 2.5 cents per km, which is expected to amount to around $315 per year. The average petrol or diesel car driver typically pays around $613 per year in fuel excise, so the tax still represents a significant savings over traditional vehicle taxes.
In Victoria, EVs come with some important incentives to reward drivers.
EVs are exempt from paying the ‘luxury vehicle’ rate on stamp duty, but do carry a flat-rate stamp duty of $8.40 per $200 of market value. In addition, EVs qualify for a $100 annual discount on registration. In addition, the first 4,000 EV buyers in Victoria can also get a $3,000 subsidy if the vehicle costs less than $68,740.
Road use charges took effect in Victoria on 1 July, 2021. The charge taxes drivers 2.5 cents per km, which will amount to around $315 each year.
The Sunshine State’s EV programme is relatively young, but the state has made it a priority to further develop its incentives. In Queensland, hybrid and electric vehicles pay a reduced rate on stamp duty: $2 per $100 in value up to $100,000 and $4 per $100 thereafter. This represents a significant savings, as traditional stamp duty is set at $6 per $100.
Incentives in Tasmania are relatively new, but we expect to see further development of an EV strategy soon. In Tasmania, stamp duty is waived on all new and used EVs. This represents an average savings of around $2,000 per vehicle.
Incentives for EVs are brand new to the NT, established in July of 2021. With just 38 EVs registered in the territory, the incentives are designed to drive increased uptake. Starting in July 2022, EVs will carry no registration costs and a $1,500 reduction in stamp duty.
At present moment, there are no existing EV incentives in South Australia. However, South Australia plans to introduce a road usage charge for EV drivers starting in July 2022. The tax will cost drivers 2.5 cents per km.
The largest state in Australia has fallen behind on EV incentives and infrastructure. At present moment, there are no incentives for EVs in Western Australia.