Should your next car be electric?

I need to declare something here – I really like the concept of electric cars, not necessarily for their climate credentials – but for the fact they require little servicing and are really responsive when you put your foot down! Various governments across the world are looking at how to incentivise a transition to this technology, with the Australian government opting for an indirect approach. A recent bill has passed to make electric, hydrogen and plug-in hybrid cars exempt from FBT. To put it simply, you can salary sacrifice your wage (before tax money) to buy a vehicle, that could be 100% private. Retrospectively starting 1 July 2022, any new car that fits the requirements, with a price tag of less than $84,916 (before state government taxes like stamp duty, third party insurance etc) is eligible for this exemption. And, while prices of electric vehicles in Australia are quite high, these tax savings may make the purchase a lot more affordable. This can mean that for an individual who salary sacrifices a $50,000 vehicle, the savings would be up to $4,700 per year. Over 3 years, this amounts to tax savings of $14,100 – essentially bringing the price of the car down to $35,900. However, while these savings are great, you do need to be able to find one, with delivery times still being quite erratic over all electric vehicle brands. FYI – I still have my Ranger Ute for towing, I can’t see an electric car replacing this vehicle for a long time yet! Mark