Coalition reforms vehicle tax and subsidy schemes

The new coalition government has ended the 'ute tax' and Clean Car Discount for all vehicles registered after 31 December 2023.

Under the previous government, motorists who bought electric vehicles (EVs) and hybrid vehicles received subsidies while those who purchased utes and SUVs were taxed.

Transport Minister Simeon Brown said the previous scheme was unfair to farmers and tradies, who had little choice about the vehicle they bought for work, while also being fiscally flawed.

“The scheme was designed to achieve fiscal neutrality, with the 'ute tax' charges covering the rebates and administration costs. However, more was paid out in rebates than was received in charges, with taxpayers footing the bill,” he said.

“Our coalition government is committed to increasing the uptake of electric vehicle ownership by supercharging EV charging infrastructure, which is one of the most significant barriers for people taking up an EV. This will have a much more long-term impact than the former government’s subsidy scheme.”

Alternative vehicle owners facing higher costs

Meanwhile, the exemption from road user charges (RUC) for owners of light EVs and plug-in hybrids will end from 1 April 2024.

People who own those vehicles will need to buy a RUC licence from 1 April. There will be a two-month transition period to allow time for people to get registered in the RUC system without being penalised for unpaid RUC. 

Minister Brown said this new system would ensure that all road users contributed to the upkeep and maintenance of our roads.

“Plug-in hybrids are powered by electricity and petrol and have had to pay petrol tax, but not to the same level as petrol equivalent vehicles. To ensure that plug-in hybrids avoid paying twice through both fuel excise duty and RUCs, these vehicles will pay a reduced rate RUC,” he said.

“The previous National Government exempted EVs from paying RUC to encourage their uptake. This exemption was always intended to end when EVs hit around 2% of the light vehicle fleet and we’re now at that point.”

I don’t just do home loans – I can also help you get vehicle finance for traditional vehicles, hybrid vehicles and EVs. Get in touch if you need a loan.