The federal government confirmed on 12 May that a national EV road user charge is effectively off the table for now. Transport Minister Catherine King cited the need to keep encouraging EV uptake as the reason. Good timing, given April EV sales hit a record 16.46 per cent market share. But there is a catch buried in the budget: the Fringe Benefits Tax exemption that has put around 100,000 EVs on Australian roads is already being wound back.

What the pause actually means

The road user charge idea was straightforward: EV drivers pay per kilometre to replace the fuel excise they no longer contribute. Treasurer Jim Chalmers floated it earlier this year. Critics, including the Australian Electric Vehicle Association, called it an "ill-conceived tax" that would specifically penalise EV owners for choosing clean transport.

For now, Minister King has stepped back. The budget instead directs $40 million toward EV charging stations in regional black spots and kerbside locations, plus $40.5 million to electrify Australia Post's delivery fleet. Both are more immediately useful than a per-kilometre charge.

The FBT story is more complicated

Here is the part the budget headlines buried. The FBT exemption, which made EVs under the luxury car tax threshold eligible for zero fringe benefits tax under a novated lease, is being wound back in stages. From April 2027, only EVs priced at $75,000 or less will qualify for the full exemption. From April 2029, all EVs will get a 25 per cent FBT cut rather than a full exemption.

That means the window for picking up a Model Y or a BYD Sealion 7 tax-free via a novated lease is narrowing. If you have been sitting on the fence about a salary-sacrificed EV purchase, the clock is ticking.

Cartell Assessment

The road user charge pause is legitimate policy. Taxing EV drivers while the country is still trying to build charging infrastructure and grow the market would be poor timing. But the FBT wind-back tells you something the government is less eager to announce: the policy settings that drove EV market growth are being peeled back quietly, even as the Transport Minister talks about encouraging uptake. These two signals are pointing in opposite directions. Watch the FBT changes, not the road tax headlines.

AU Outlook

The full FBT exemption is gone from April 2027 for anything priced above $75,000. If you are shopping for an EV under a novated lease before then, the calculation changes materially after that date. The government has committed to reviewing the road user charge again in 2028. It will be back.