5. Conclusion

This chapter has shown that the tax system can be an important component of climate policy, but the system has thus far been underutilised by the Australian government, with the exception of encouraging the uptake of low-emissions vehicles. The treatment of SMCs and ACCUs as tradeable intangible assets, generating assessable income and deductible losses within the income tax system, normalises climate change mitigation as part of ordinary business activity. However, there is an opportunity to use the tax system to more broadly internalise the cost of GHG emissions, through reform of the fuel tax system or even a broad-based carbon tax applicable to activities outside the scope of the Safeguard Mechanism.

For professionals, incorporating a new climate conscious principle of good tax policy — climate impact — into consideration can guide advice that aligns with efforts to reduce carbon. For instance, recommending salary packaging of electric vehicles to leverage FBT concessions is an effective way to help clients minimise their environmental impact while benefiting from tax incentives.