The Albanese Government has put in place legislation that will remove the Fringe Benefits Tax on electric cars making them more affordable for small business and families.

The legislation, Treasury Laws Amendment (Electric Car Discount) Bill 2022, will amend the Fringe Benefits Tax Assessment Act 1986 to exempt from FBT the use of eligible electric cars made available by employers to employees.

This FBT exemption will apply to battery electric cars, hydrogen fuel cell electric cars and plug‑in hybrid electric cars.

The exemption will be available for eligible electric cars with a first retail price below the luxury car tax threshold for fuel efficient cars ($84,916 for 2022‑23) first made available for use on or after 1 July 2022.

If a model valued at about $50,000 is provided by an employer through this arrangement, the fringe benefits tax exemption would save the employer up to $9000 a year.

For individuals using a salary sacrifice arrangement to pay for the same model, their saving would be up to $4700 a year.

This measure forms part of the Government’s Electric Car Discount, which will reduce the up‑front and ownership cost of electric vehicles, addressing a significant barrier to their uptake.

The FBT exemption will be implemented as an ongoing measure and reviewed after three years in light of electric car take‑up to ensure it remains effective.

On top of this bill, the Government will also introduce changes to remove the five per cent import tariff for eligible electric cars, as well as the extremely overdue development of Australia’s first national Electric Vehicle Strategy.

This legislation is aimed at encouraging greater take up of electric cars and contribute to reducing transport emissions.