With petrol prices continuing to climb, it’s no surprise that more Australians are turning to electric vehicles (EVs) as a cost-effective alternative. But a potential shift in how EVs are taxed means this is a space worth watching.
Electric vehicles have been largely exempt from the fuel excise and the Federal Government has supported their uptake through a range of incentives aimed at reducing emissions and easing the transition away from petrol. However, as EV adoption grows, the government is now reconsidering how road usage should be funded.
Road User Charges (RUCs) are fees calculated on a per-kilometre basis. Rather than contributing to road funding indirectly through the fuel excise, EV owners would pay based on the distance they travel. While RUCs for EVs are currently legislated to commence in 2027, the government may look to bring this forward if EV sales reach 30% of all new vehicle purchases.
Fuel excise has long been a key funding source for Australia’s road infrastructure. As more drivers switch to EVs, that revenue base is shrinking. RUCs are the government’s proposed solution — a fairer, usage-based model that ensures all road users contribute, regardless of what’s powering their vehicle.
If you’re considering purchasing an EV, the existing upfront incentives — including the FBT exemption for eligible vehicles — remain in place. That said, it’s worth factoring potential future running costs into your decision. If you already own an EV, there’s no immediate change, but it’s a good idea to stay across developments as the policy landscape evolves.
Businesses can still take advantage of the current tax benefits available for EVs, including the fringe benefits tax (FBT) exemption and deductions for running costs. However, as RUCs would directly increase the cost of operating an EV fleet, businesses shouldn’t rely solely on these benefits when planning long-term vehicle strategy.
Electric vehicles remain a cost-effective and tax-advantaged choice under current rules. But the tax landscape is shifting and it pays to plan ahead.
Written for you by Baylee Jones
The information contained on this website and in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. Taxation, legal and other matters referred to on this website and in this article are of a general nature only and are based on our interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Client Portal
View Comments