The Australian Government has announced significant taxation changes.  Whilst the salary packaging impact will be limited to electric vehicles (EVs), the changes to long standing concessions are very significant, so our in-house tax guru Anton Gaudry has put together the below summary.

Electric Vehicles

The Electric Vehicle (EV) Fringe Benefits Tax exemption continues until April 2027, allowing employees to pay for eligible EVs via salary packaging without incurring FBT.  It applies to battery electric vehicles, hydrogen fuel cell cars, and some plug-in hybrids under the luxury car tax threshold (under $91,387).

In summary:

• Full FBT exemption remains for eligible BEV/FCEV cars under the luxury car tax threshold until 31 March 2027.
• From 1 April 2027: The exemption only applies to cars costing less than $75,000. For cars over this value (and still under the luxury car tax threshold), there is no exemption, but a 25% FBT discount is applied.
• From 1 April 2029: All FBT exemptions end, with a 25% FBT discount applied to all electric vehicle novated leases (again, under the luxury car tax threshold). This will be applied by way of a 15% statutory formula, rather than the regular 20%.

For those considering an EV vehicle, the rules indicate an incentive to act sooner rather than later.

Negative Gearing

The Federal Government will restrict the use of negative gearing to new builds only from 1 July 2027.

For existing property owners, the good news is that everyone who already negatively gears their investment properties can keep doing so until they are sold. 

However, if you purchase an existing property after the Budget, it will be captured by the new rules. Therefore, if you invest in an existing property in the next few months say, you will be able to negatively gear it until 30 June 2027.  After that, negative gearing will cease.  No restrictions apply to new builds.

Capital Gains

The Federal Government will remove the 50 per cent discount to capital gains.  Tax will now apply to the ‘real’ gain, essentially the gain over and above inflation.  This is the ‘old’ system (before the introduction of the 50% discount in 1999).

Under the new (‘old’) system, when an investors sells an asset, the ATO will use the CPI to determine how much its value has grown in real terms.  Tax will then apply to the capital gain – over and above the indexed value. 

The tax rate on capital gains will be at least 30%, higher if the seller is in a higher income tax bracket.

However, if you invest in a new property – you can choose to receive the old 50 per cent CGT discount or be taxed under the new system. So, if you have invested in an existing property, shares and other assets – the new tax rate will apply to all real capital gains made from July 2027 onwards.

Want to Chat?

Anton and the team are always happy to discuss all things tax. And outside of the salary packaging space, we’re connected to a great network of accountants and specialists! So, please feel free to get in touch with your GO Salary Care Manager. Not a GO Salary client? Please contact us here.