Car buyers could receive more incentives to purchase an electric vehicle as part of the government's proposal to reduce upfront costs.
Changes to fringe benefits tax and removing the import tariff on electric vehicles are part of a proposed reforms to make the cars cheaper for more people.
Treasurer Jim Chalmers introduced the proposal to parliament on Wednesday.
It will amend existing tax laws to ensure employers providing employees with an eligible car would not have to pay fringe benefits tax on it, he said.
Employees entering into salary sacrificing arrangements to lease an electric car would also pay less.
Battery electric cars, hydrogen fuel cell electric cars and plug-in hybrid electric cars would be eligible.
The changes will mean an employer providing a $50,000 electric vehicle would save up to $9000 a year, the treasurer said.
People using a salary sacrifice arrangement to pay for the same model would save up to $4700 a year.
"This sends an unmistakable signal to this parliament, to Australian industry and to the Australian people - and beyond - that Australia now has a government which understands the economics of cleaner, cheaper and more reliable energy," Dr Chalmers said.
Removing the tax will help kickstart a second-hand electric car market in the coming years, the co-founder of Australia's first virtual dealership for the vehicles said.
"We're already seeing the effect of this on uptake and the driving force for people is that it will ultimately improve affordability," Vyro chief Will Wise told AAP.
"We've seen around an 80 per cent increase in enquiries ... removing this tax is a great way to help improve the affordability of EVs."
But Australia is still lagging on emissions standards, he said.
The fringe benefit tax exemptions would be reviewed after three years to monitor its effectiveness at driving uptake.
The government will also remove the five per cent import tariff for eligible electric cars and develop Australia's first national Electric Vehicle Strategy.
