Australian Treasurer Jim Chalmers is actively exploring two major reforms in electric vehicle (EV) policy: the introduction of a national road‑user charge (RUC) and the phasing out of the fringe benefits tax (FBT) exemption for EV buyers.

In a recent address to the National Press Club, Chalmers confirmed that a road‑user charge is now high on the reform agenda, aimed to replace fuel excise revenue lost as Australians transition to EVs.

With fuel excise generating $15.7 billion in 2023–24, a projected shortfall of around A$470 million is expected from 2024–25.

Instead of taxing fuel, the proposed RUC would charge drivers based on kilometres travelled, offering a fairer, mileage-based system. Chalmers indicated the federal government will coordinate with states and territories – like NSW and Western Australia, which plan their own schemes – to implement a national framework.

State-level trials have already begun: Victoria introduced a per-kilometre charge in 2021, which was ruled an unconstitutional excise by the High Court, forcing a refund of around A$7 million.

NSW aims to implement a charge by 2027 or once EVs make up 30 per cent of new car sales.

While debate continues on design – likely involving odometer or GPS tracking – the Australian Automobile Association supports RUC provided the revenue is ring‑fenced for road infrastructure.

The FBT exemption to encourage EV uptake is also under the microscope. This incentive costs the budget around half a billion dollars annually, and critics argue it subsidises wealthier EV buyers who do not directly contribute to road infrastructure via fuel taxes.

A current benefit exempts EV novated leases under the luxury car threshold from fringe benefits tax (FBT), worth approximately $4700 per employee on a $50,000 vehicle.

However, this exemption is expected to come under review by mid-2027, in line with evolving EV uptake.