The Australian Labor government extended its electric vehicle fringe benefits tax discount until the end of March 2027, while setting out a slower phase-down that will narrow the benefit from 2027 and cap it at 25% from April 2029. [1]
Treasurer Jim Chalmers and Energy Minister Chris Bowen said the new rules will encourage manufacturers to offer “more affordable and cheaper to run EVs” in the Australian market. They also said: “We will continue to provide support for families who choose to switch to EVs as we transition to a permanent 25% discount on FBT for these cars.” [1]
The original EV tax break was introduced at the start of 2023 to make electric vehicles cheaper as fuel prices rose after the Iran war. The government now projects the scheme will cost $10.1 billion over 7 years to 2029, up from an earlier estimate of $605 million. [1]
Under the new schedule, the full fringe benefits tax discount will apply until the end of March 2027. After that, the full discount will only cover electric vehicles costing under $75,000 until April 2029. From April 2029, the incentive will fall to a 25% FBT discount for all EVs below the luxury car tax threshold of $91,387. [1]
The government is also facing a market where Chinese EV makers such as BYD already sell entry-level models in Australia for about $26,000. The next change in the tax break takes effect on 1 April 2027, when the full discount is limited to cars under $75,000. [1]
