FBT and Electric Vehicles – Makes Me a Bit Sad….

FBT and Electric Vehicles – Makes Me a Bit Sad….

As many of you know I am a bit of car nut. There are more cars than driving licence holders in my household.

And I am sure if you were to take the emissions belched out by my cars they would not make happy reading for the trees in my neighbourhood. Not that I have had emissions  measured. I only know because when I start one of my cars the whole house shakes and the dog goes into hiding.

I still have no idea how a combustion engine works but underneath the hood, some serious witchcraft happens so a machine that weighs a ton and half can move at over 200km/hour.

This has now been replaced with electrical batteries. Except I am not excited.

There was a time when cars where about excitement. Now all we care about is getting from A to B efficiently. There was a time when every boy had car posters on their wall. I don’t see that anymore.

And this is due to car manufacturers making boring cars (because they are then safer) and also regulators who come up with ideas that will save the environment but in reality have no idea how to save the planet. And this is also in part because the world has moved in the age of smartphones and social media. Its more exciting to watch a cat fall off the sofa than it is to get the trill of driving on a track.

This, however, makes me a dinosaur living in a modern world. All a bit confusing.

But the Government, which wants to show its environmental credentials has come up with an idea that they hope will push many businesses to buy electric vehicles (EV). Australia has been quite slow in taking up EV, mostly because they are expensive and also because we tend to travel large distances. And that’s before we even talk about charging stations.

The Government has decided that FBT does not apply to EV’s. But as with everything that comes from the Government, there is a catch.

Here are the rules

  • It only applies to vehicles able to be charged from an external source, meaning for hybrids it must be a plug-in hybrid (PHEV).

For those not technically minded there are two types of hybrids. One that you have to plug into an electrical socket and one where the electricity is generated by the car itself using a petrol engine.

The FBT exemption only applies to the one where you use an electrical socket.

  • It only applies to vehicles below the luxury car tax limit, which is $84,916 for fuel efficient vehicles.

This limits the field a bit because a base model Tesla Model 3 would qualify, but no other Tesla model will, and a Porsche Taycan is definitely out. And if your think a Kia is what you want you may be in a bit of shock too. A base model qualifies but with options it might fail.

This is still draft legislation so it may take months before we see a final version.

From a tax point of view, it may be exciting to know you do not have to pay for FBT. But I have always said never make a decision based on taxes.

You see the price of EV is still way too high. It is almost double the cost of a standard equivalent petrol car and the only logical reason to buy one is because you care deeply about the environment and want to do your bit.

And maybe that is why I am not so excited by this. Until prices fall, charging points increase and range fear is eliminated, this does not work for me and I don’t care how big a tax benefit I get.

But as I said I am a dinosaur living in a modern world so knowing how the world works this tax break may just eliminate my V12 6Ltr monster of a car to the scrap heap. And that makes me a bit sad.