Tax office ruling provides big boost for electric vehicles in Australia | RenewEconomy

Tax office ruling provides big boost for electric vehicles in Australia

Print Friendly, PDF & Email

Tax office ruling says EV drivers can claim business deductions at same rate as petrol cars. Given lower rates of fuel and maintenance, that represents potential saving of $2,200 a year for EV owners.

Print Friendly, PDF & Email

An Australian Tax Office ruling has provided a major boost to the economics of electric vehicles in Australia, just as enthusiasts prepare to queue up to register interest to buy the first mass-market electric vehicle to be offered in serious volume in this country.

The ATO ruling means that drivers of electric vehicles will be able to claim the same deductions for business use as they currently do for cars running on internal combustion engines.

That is despite the fact that electric vehicles require less servicing, less often, and their brakes wear less because of regeneration. And, of course, they don’t consumer liquid fossil fuels, although they do need to be charged (either by fossil fuels or via solar panels).

The ruling was actually included in an explanatory memorandum released last year. Previously, drivers of electric vehicles and hybrid cars did not have access to the cents per kilometer method as the rates were based on engine size.

The ATO ruled that separate rates based on the size of the engine are no longer available, so all motor vehicles will have a single rate of 66c/km – for valid business use.

EV’s, enthusiasts say, typically cost less than a third  of their ICE equivalents per kilometre, and as little as one fifth if charged either on off-peak rates or through household rooftop solar.

According to electric vehicle advocates, that means – on the basis of one third of the running costs – that the ruling may boost the economics of electric vehicles – such as the Tesla Model S, the BMWi, the Nissan Leaf, and the upcoming Tesla X and the mass-market Tesla 3 models – by as much as $2,200 a year.

(Vehicles can claim up to 66c/km for up to 5,000kms. If running costs are one third the cost of ICE, that translates to a benefit of $2,200).

In Australia, unlike the US where there are significant tax breaks and other incentives, as there are in numerous European countries, there is little government support for EVs, apart from reduced registration fees in some jurisdictions.

Australia has been slow to adopt electric vehicles, although wealthy types have been rushing to pick up the high-performance Tesla Model S, priced at $128,000 and beyond for additions and extended range.

But the market may change as early as next week. That’s when Tesla is opening up registrations for its new Model 3, its “mass-market” offering that will be priced at $US35,000.

Australians will be the first in the world to have the opportunity to register their interest to buy a vehicle (at the cost of a $1,500 deposit), with four stores in Melbourne, Sydney and Brisbane opening early to accommodate demand – a full 24 hours before the design and features of the vehicle are released.


Print Friendly, PDF & Email

  1. Ian 4 years ago

    The tax theme should be taken further regarding luxury tax and tax write-offs. The vehicle cost should have two components, 1. The vehicle without its batteries and 2. The cost of the batteries. Batteries have a limited life and are essentially the ‘fuel’ of the vehicle and should be considered as consumables or possibly as part of the vehicle’s running costs.

  2. Dan 4 years ago

    Guessing AUD$55k on-road for Tesla 3

    • john 4 years ago

      So about the same cost as some of the mid range euro cars and a far better purchase i submit.

    • Alastair Leith 4 years ago

      c.f. around US$17,000 in USA (AUD$23k) given federal and state subsidies. So much for our innovation nation aspirations. How about the government funds a local EV manufacturer… there’s plenty of fat on that mark-up even if the Tesla Model 3 does turn out to be amazingly good value.

      • JohnM 4 years ago

        Yes, in fact we just happen to have several very nice car manufacturing plants, recently vacated and not doing a lot. Complete with infrastructure, and unemployed mechanics, fitters and technicians.
        Tesla bought just such a factory in California, where their cars are now built.
        Tesla will also be building cars in China, -but just for the Chinese market.
        I think Tesla should be having a chat with South Australia.

      • Dispassionate 4 years ago

        If there is plenty of fat as you say then why does the government need to fund it?

  3. JustThink4Once 4 years ago

    Just think of all those lovely electric vehicles not paying petrol tax.
    What’s a government to do………..

    • david H 4 years ago

      I am sure they will find plenty of alternatives.

    • Martin Winlow 4 years ago

      A much bandied about “Yeah, but…” amongst the EV-sceptical…

      However, just consider this… In 2006 in the UK an estimated £7b was spent by the NHS treating respiratory diseases ( much of which could (yes, ok, ‘arguably’) be down to people inhaling vast quantities of fossil-fuel-generated particulates and other nasties. I dare say the health costs in the US are commensurably similar, it’s just that in the UK almost all of the treatment is paid for by ‘HMG’ ie the taxpayer.

      That represents a good 1/3 of the duty raised from vehicle fuels.


      • Barri Mundee 4 years ago

        Actually, in a fiat currency nation, such as the UK and Oz, taxes do not fund the national government. It does not need tax “revenue” and it creates money as it spends. Taxes are there to regulate demand and to encourage or discourage certain behaviour. This is a jarringly counter-intuitive concept but put simply, the prevailing paradigm is not what happens. The national government’s spending is only constrained by the real, on the ground resources available.

    • john 4 years ago

      It will tax the power as in the electricity or impose a road use tax

  4. JohnM 4 years ago

    In the US, emission free vehicles get a $10,000 federal subsidy, as well as up to another $8,000 state subsidy in some states, like California. This puts the model 3 out at around $17,000. -Look out US car market…
    Shame it’s nothing like that here, but still very worth considering.
    It will be interesting to see what sales are like here.
    Once these machines proliferate, charge stations will proportionately multiply, removing the old zombie of ‘range anxiety’.
    Other manufacturers will then jump on board.
    The demand for improved battery tech could also mean exponential improvements in range and recharge performance, with flow-on benefits to households and local grids.

    • john 4 years ago

      So if living in California it is a no brainer to put your name down for a model 3

    • Dispassionate 4 years ago

      “Shame it’s nothing like that here”
      I disagree. If the value is there then people will buy it, don’t see why others should help you pay for your EV. Government intervention will simply distort the market at a greater cost to the tax payer once again.

      • ElectrikLeo 4 years ago

        The taxpayer already subsidizes internal combustion engine vehicles through the externalised costs (about $5billion annually) on the health system due to our current toxic transport fleet. We also pay through the nose for imports of foreign oil distorting our balance of trade. I won’t even begin with the environmental costs.

    • Viv 4 years ago

      $7,500 Federal, $2,500 State (eg California).

    • Viv 4 years ago

      $7,500 Federal, $2,500 State (eg California).

  5. pocketfrog 4 years ago

    “…significant tax breaks and
    other incentives, as their are in numerous European countries…”

  6. Pete 4 years ago

    To bad if you live in an apartment in Australia, I have been trying to get a power point put in at my expense for the last three months, body corporate and owners are a fucking joke!

    • Peter Campbell 4 years ago

      Are you in the ACT? The Unit Titles (Management) Act has some useful provisions to make it easier to get sustainability infrastructure installed on common property.

      The ‘flatchat’ forums are a good place for advice on this topic, especially for NSW but other states too.

      My guess (as treasurer of an owners corporation (body corporate)) is that your executive committee is unsure about how to do it rather than actively opposed. There are rather more matters to address than might be immediately obvious for something as simple as one power point.

      In my case, I am in townhouses and our shared parking area is close to a neighbour’s unit. Our executive committee approved a power point for me 8 years ago and this was a prerequisite for me getting an electric car back then (DIY and now have an iMiEV as well). It is on common property but running off a neighbour’s unit with a subsidiary meter in his meter box. In the ACT the EC can approve a ‘minor use’ of common property for an individual. Elsewhere even the smallest things might need a ‘special by-law’. That is before you get to where the mains can be accessed and questions of metering.

      • Pete 4 years ago

        Hi Peter, no I am in NSW, Sydney. Thanks I’ll check out the flat chat forum. I have had quotes and confirmation from electricians that the power point can be connected to our power meter which is not far from my parking space. There is already a tray holding other power and data cables along the wall where I would like the power point positioned. The last thing I heard was that body corporate wanted the owner of my apartment to confirm thew would be liable if there was a fire! Meanwhile my car is surrounded by 50 other cars full of explosive petrol tanks! I needed to get a new microwave oven recently too, maybe I should have asked for permission to plug that in!

        • Peter Campbell 4 years ago

          Sounds like your situation is just about ideal. There is no way we could get a cable back to my unit’s meter from where I have to park.
          Flatchat will give you better NSW-centric advice but my expectation is that the EC would want a bylaw passed at a general meeting that makes the owner of your unit responsible for repair and maintenance of the additional powerpoint and cabling installed on the common property and requires it to be kept in a safe condition. This would be standard for just about any use of common property that one lot owner might be granted.
          I don’t think a NSW EC has a simple way to approve minor uses of the common property. In the ACT the EC can grant minor uses, subject to conditions, if satisfied that the approved use of the common property would not adversely affect the appearance of the common property or unreasonably affect the reasonable use and enjoyment of the common property by other residents (or words to that effect).

Comments are closed.

Get up to 3 quotes from pre-vetted solar (and battery) installers.