With the passing of the Electric Car Discount Bill 2022 in December 2022, electric vehicles with a value of less than $84,916 (and first held for use at or after 1 July 2022) are eligible for an exemption from fringe benefits tax. A car must be classified as a zero or low emissions vehicle in order to meet the requirements for the exemption, including battery electric vehicles, hydrogen fuel cell electric vehicles, and plug-in hybrid electric vehicles.
Once we ran the numbers, we were astonished at the great savings that can be made through the exemption. Comparing a plug-in hybrid electric car to its petrol counterpart we found the former 41% cheaper to own and maintain over 5 years despite costing $18,000 more.
We conducted the comparison between a Mitsubishi Outlander Plug-in Hybrid Electric Vehicle (PHEV) and the non-exempt petrol equivalent model. We opted for a PHEV as it overcomes the potential drawbacks and logistical issues of running an electric vehicle, as it can be operated without needing to be plugged in to a recharge battery.
Although the PHEV had a driveaway price of $62K compared to the petrol version’s of $44K, it was found to be much more cost-efficient to own and maintain. Over five years the total cost for the petrol Outlander was $46,223, while the PHEV came in at $27,351, a difference of $18,873 or 41%.
Our detailed calculations can be found in the accompanying spreadsheet.
Assumptions:
- Fuel cost per litre $1.88
- Annual kms travelled 15,000.
- 100% finance over 5 years with 30% balloon payment.
- Tax Rate inc. Medicare Levy 47%
- At end of five years, car value is equivalent to balloon payment.
- 5% Annual increase in running costs.
- Fuel economy: PHEV 5.51 per 100kms. Petrol 10.21 per 100kms.
- Business use was 0%
Further Reading:
https://www.pwc.com.au/tax/employment-taxes/deep-dive-fbt-spectrum-for-electric-car-benefits.html
