AUTOMOTIVE industry associations comment on the 2026 federal government budget

• Capital Gains Tax: 50% CGT discount abolished, replaced with an inflation-based model and a minimum 30% CGT from July 1, 2027.
• Trusts: A new minimum 30% tax on discretionary trust distributions from July 1, 2028.
• Negative gearing: Limited to new housing from July 1, 2027, with existing properties grandfathered.
• Instant asset write-off: The $20,000 tax write-off for small businesses now permanent.
• FBT: Exemptions for EVs (Electric Car Discount) to be significantly phased out.

AADA: The Australian Automotive Dealer Association said the government has adopted the recommendations from its 2026-27 pre-budget submission to expand the scope of the DRIVEN program – which supports dealers as the touchpoint in the EV transition – in order to better meet industry needs. 

The AADA supports the Government’s recently announced changes to the Electric Car Discount, describing the reforms as a sensible adjustment to ensure the policy remains sustainable and accessible to everyday Australians.

AADA CEO James Voortman said the EV discount changes struck an appropriate balance between supporting EV uptake and maintaining long-term budget sustainability. “As the only demand-side incentive currently available to encourage EV uptake, these changes provide greater certainty for consumers, dealers and the broader automotive sector.”

The AADA also supported the government’s ongoing commitment to addressing the long-standing power imbalance between dealers and global vehicle manufacturers, through $9 million to support the implementation of unfair trading practices (UTP) and consumer guarantee and supplier indemnification reforms.

AADA CEO James Voortman

“The franchised new car retail sector continues to operate in an increasingly complex environment characterised by margin pressure, rising costs and rapid brand expansion, as such, it is critical the regulatory framework evolves to provide fair protections for local businesses and consumers,” he said.

“This is a challenging period for Australian dealers who are managing the impacts of evolving regulatory settings, including the New Vehicle Efficiency Standard (NVES), requiring substantial private investment at a time when business conditions remain challenging and policy settings continue to evolve.” 

The AADA said broader economic conditions, energy policy and confidence to invest in business would remain critical issues for the sector over the next 12 months.

MTAA: The Motor Trades Association of Australia (MTAA) welcomed key budget measures that will support small business investment, fuel resilience and workforce capability, but warned further automotive-specific reform was still needed.

MTAA interim executive director Peter Jones said the permanent extension of the $20,000 instant asset write-off, continued loss carry-back arrangements and broader productivity reforms will provide welcome support for small and family-owned automotive businesses across Australia.

“These measures improve cash flow, support investment confidence and help businesses continue upgrading equipment, tooling and technology.”

MTAA interim executive director Peter Jones

Mr Jones said the Budget’s focus on reducing regulatory burden and improving productivity was particularly important for the automotive sector, which is dominated by small businesses operating in highly competitive environments.

It also welcomed the $14.8 billion fuel resilience package, including temporary fuel excise relief and the temporary reduction of the heavy vehicle road user charge.

While the Budget included further support for Australia’s transition to electric vehicles through the expanded DRIVEN program and changes to the Electric Car Discount, Mr Jones said the industry had consistently highlighted the importance of ensuring businesses had the capability to support the transition.

“EV readiness is not simply about vehicle sales,” he said.

“It requires investment in workshop infrastructure, charging capability, specialised tooling, diagnostic equipment and — most importantly — skilled technicians.”

MTAA said several priorities identified in its 2026–27 Pre-Budget Submission remain unresolved, including automotive apprenticeship reform, Luxury Car Tax reform, end-of-life vehicle stewardship schemes and stronger national protections to address insurer-repairer conduct.

AAA: The Australian Automobile Association (AAA) said it was concerned at the budget’s $3.8 billion cut to road investment funding but welcomed  commitments to make cost-effective investments in the ‘black spot’ and Roads to Recovery programs, as well as real-world testing of light vehicles, and to address national fuel security, allocating $11.9 billion in funding over five years after more than a decade of bipartisan neglect. 

It was also concerned that the luxury car tax remains for many everyday vehicles “that cannot be reasonably defined as luxury cars” which have “market-leading safety and environmental benefits”. 

It also said that the AAA notes that only 70 per cent of fuel excise collected over the next four years will be re-invested in the  transport network. This is down from the 79 per cent forecast 12 months ago.  

AAA managing director Michael Bradley

AAA managing director Michael Bradley said: “There will be an increasing need for investment in recharging stations to support  EVs as more Australians shift to electric vehicles and hybrids. And our existing road  building and maintenance costs will remain. That means overall funding must increase.” 

“The AAA calls on the government to start planning now for a road-user charge to be  introduced in the 2027 federal budget. Australia needs a distance-based road-user charge with the revenue directed to funding charging  stations and other upgrades needed for the rapid growth of EV ownership.

“The AAA recognises the need for fiscal restraint, but  roads enable future economic growth, and Australia must keep investing in infrastructure that boosts productivity. We caution that investing less in roads now will mean spending more in the future to play  catch-up – just as has happened with fuel security.’