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With the hammer predicted to drop on EV subsidies in the coming weeks, there are calls to instead shine the spotlight on Australia's ute segment, where similar tax breaks exist for "commercial vehicles."
Since 2022, EVs positioned below the Luxury Car Tax (LCT) threshold of $91,387 for electrified vehicles, when owned through a novated lease, have no longer been subjected to the Fringe Benefit Tax (FBT). The program is expected to cost $1.35 billion over the 2025/2026 financial year. The incentives are currently under review, with formal submissions closing last month.
Similarly, most utes are not subjected to FBT obligations, provided the vehicle can carry a load of one tonne or more, or carry more than eight passengers, or are not primarily designed for carrying passengers. The vehicles must only have "limited" private use. LCT also does not apply to “a commercial vehicle designed mainly for carrying goods and not passengers”..
In a piece published late last year, think tank The Australia Institute suggested changing EV policy that was designed to accelerate uptake of electric vehicles because it had been too successful, while leaving commercial vehicle tax breaks unchanged, was "absurd."
"If the (Productivity Commission) doesn’t think we should have more EVs on the roads, it should say so. But arguing that we should remove subsidies for EVs because they are working as intended is simply absurd," says the institute's co-CEO, Richard Denniss.
"But the real problem with the PC’s pogrom against EV subsidies is its lack of consistency. While it is happy to punch down on the small number of EV drivers, it has chosen to remain strategically silent about the enormous subsidies that underpin the record sales of enormous 4WD utes.
"Because most of the heavy and inefficient twin-cab utes on our roads are classified as 'commercial' vehicles by the tax office, their drivers not only get to park in loading zones for free while they grab a coffee, they get to avoid FBT and luxury car tax as well."
While it's hard to determine an exact cost on the FBT exemptions afforded to commercial vehicles, Mr Denniss suggests the system is being abused – citing the number of utes on Australian roads as proof.
"The exact cost of the FBT exemption is unclear. But given Australia has at least 1.5 utes for every tradie – and that includes jobs like bakers, rarely known for their utes – the effective subsidy is probably considerable," he said.
Among the changes the Institute called for is to demand the Productivity Commission "Do all it could to reduce the number of enormous utes on our narrow streets."
EV makers have also begun to agitate against expected changes to electric vehicle tax relief. In an interview with CarsGuide this week, Polestar Australia chief Scott Maynard insisted the policies were working as intended.
"We're campaigning heavily to the Treasury and to the Government to leave the FBT standards as they are. We're seeing this system work," he said.
"The Government has got published guidelines on where they want to be in 2030 and 2050, and they need the electrification of the Australian light vehicle fleet to be able to achieve those goals. They want five million (electrified) cars on the road by 2030. They need these programs to be able to achieve those outcomes.
"The New Vehicle Efficiency Standard (NVES) was set up to encourage manufacturers to bring more of their electrified product out of their global catalogue into the Australian market.
"That's worked. We've now got 150 electrified models on sale in Australia across a variety of segments. So that's a big tick. The FBT component of that then drives the pull."
Mr Maynard went on to suggest that similar incentives were being "used and abused" in the commercial vehicle sector.
"The FBT is the incentive to sell those (electrified) cars. It's matched as the same sort of incentive that you get if you're going to buy a light commercial vehicle in Australia. It makes sense that we run that. It's actually being used and abused in the light vehicle space."
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