Changes to FBT rules

[Road_Warrior]

The Government scrapping the carbon tax will leave a $3.8 Billion revenue black hole for the next budget process. So it looks like they are changing a modifying a few other things to compensate. One of those which will be of interest to people on a car forum is FBT rules for car usage (salary sacrificing and company vehicle packages).

http://www.abc.net.au/news/2013-07-1...n-rudd/4822556

• Tax applies to employer-provided car used for work and personal use, or a privately-owned, salary sacrificed car.
• Benefit currently calculated using operating cost method (log book) or statutory formula method.
• Operating cost method: cost of running car multiplied by proportion of personal use of car (recorded in log book).
• Statutory formula method: cost of car multiplied by 20 per cent, regardless of actual personal use of car.
• Statutory formula automatically assumes significant proportion of use of the car is for business purposes.
• Removal of statutory formula method will apply to contracts entered into after July 16, 2013. It will be effective from April 1, 2014.
• Government says car log book apps now make operating cost method easier to calculate.

My question is: will this put the brakes on Australia's runaway love affair with dual cab utes/SUV's?

My reading of this is that people who have a company car that is mainly used for private use will get slugged.

PS I have alerted the mods to this thread so keep your political views and what you think of the carbon tax to yourself.

[Wretched]

doesn't effect me as I do not have a salary sacrificed car or employer provided car.
My KM claim each year is not something that the ATO would even bother investigating.
It will be interesting to see what will happen once these changes come into effect.

[xxx000]

so taxpayers won't be subsidising company cars when used privately any longer

sounds like the panic when 'business lunches' were no longer claimable

[imugli]

I think you may be right, unless the person's employer is a generous one :-)

Of course, for those that have a private company, that they own that employs them, it's still someone else's money paying for it...

[MickyB]

There will still be FBT exemptions for dual cab utes and vans, so they won't disappear. People packaging higher costs cars will be slugged the most, especially those with next to no business use. I personally don't have a problem with this. Not hard to keep a log book if you have legitimate business use.

[Crazy Dazz]

Meh, I think this ALL goes into the "wait and See what happens in September" basket.
If Krudd gets re-elected this country will have worse things to worry about than FBT.

[winmar]

All my cars since the late 90s have been salary sacrificed under the Novate lease scheme. So this has a big effect on me!

[BroadyFord]

For once I agree with Dowling. This will seal the fate of local manufacturing:

Comment: FBT overhaul on company cars a vote-changer

http://www.carsguide.com.au/news-and...a_vote_changer

The overhaul of Fringe Benefits Tax requirements on company cars announced this morning is a vote-changer.

It impacts at least a third of all new cars on the road and could lead to job losses across the automotive retail sector because of an anticipated sharp drop in sales. In the Rudd Government's attempt to fill a $1.8 billion black hole the motorist has once again been plundered.

Treasurer Chris Bowen says “the world has moved on from when this system was introduced in 1986”. But the changes - made literally overnight, without consultation - are so flawed it is difficult to know where to start.

Firstly, it will add enormously to the administration of companies big and small, and every person who drives a company car. Rather than assume 20 per cent of a vehicle's use is personal - and charge FBT on that amount, as was the case - the Rudd Government is taking a gamble that this figure is too low.

Why not simply increase it to, say, 25 per cent across the board and save everyone the paperwork? The suggestion that the work of a logbook can be solved by an iPhone app simply highlights the government's ignorance of the issue.

The net result is that companies and their employees will end up paying more for company cars which will likely see a shift in the types of cars we buy. Cheaper cars attract less FBT and utes and vans are exempt.

If the motorist is going to get slugged yet again, the least the government could do is make it easy. Can you imagine the feeling towards the government every time someone fills out their logbook? And one last point. Fleet sales account for up to 80 per cent of all locally-made cars.

The new FBT rules threaten to cripple the very industry successive Federal Governments have spent $5.4 billion over the past 10 years to protect.

[PridenJoy]

These clowns have no idea. Name an election day already.

[Brazen]

From my reading, doesnt this affect novated leasing rather than fleet vehicles per se?

So the vehicles which are used predominately for private use will be slugged but the traditional sales rep which uses his car for work wont really be affected by this? Or am I reading it wrong.

Be good opportunity to add an Australian-made exemption (fat chance of that though).

[BroadyFord]

Toyota issues a warning:

Kevin Rudd's tax changes spark fears of jobs cuts in automotive industry

http://www.dailytelegraph.com.au/bus...-1226680190385

TOYOTA has warned the Rudd Government's changes to company car tax rules could cripple the automotive industry.

The biggest seller and manufacturer of cars in Australia hit out with an uncharacteristically blunt response to Kevin Rudd's announcement today he was changing Fringe Benefit Tax regulations to help pay for dumping the carbon tax.

''Our initial assessment is the proposed change has the potential to have a major impact on the new car market in Australia. As market leader, this would significantly affect Toyota and in particular our locally built vehicles which are heavily reliant on sales to business and government fleets,'' Toyota spokeswoman Beck Angel said.

''We strongly support the FCAI's (Federal Chamber of Automotive Industries) call to Government to reconsider this policy.''

Australia's peak automotive industry body slammed the overhaul of the tax on company cars.

The new tax rules which come into effect immediately are expected to affect one third of all new cars on the road and could lead to job losses across the automotive retail sector due to an anticipated sharp drop in sales.

It could also seal the fate of the manufacturing future of Holden which is in the middle of sensitive negotiations with unions and government to continue building cars beyond 2016.

Holden has long said it needs "clear and consistent government policy".

However the sweeping changes to the 27-year-old FBT arrangements on company cars has spooked the industry.

"This will have a dire effect across the car industry," said FCAI's Tony Weber.

"I fear what this means for domestic manufacturing and I am urgently seeking meetings with the Government to encourage them to reconsider.

"The FCAI has repeatedly called for long-term certainty of and confidence in automotive and these sudden changes go completely against that."

Webber added: "The Federal Government does not truly understand the consequences of these changes. We have not been consulted and if we had we would have strongly advised against them."

Treasurer Chris Bowen says "the world has moved on from when this system was introduced in 1986".

Rather than assume 20 per cent of a vehicle's use is personal - and charge FBT on that amount, as was the case - the Rudd Government is taking a gamble that this figure is too low.

Rather than simply increase the proportion of personal use to be taxed under the FBT from, say 20 per cent to 25 per cent, the government will require every person who drives a company car to fill out detailed logbooks.

It is estimated the new regulations - which require company drivers to keep a log that splits work use and personal use - will affect at least 1 million motorists each year.



^^ It seems both sides of politics are as bad as each other when it comes to securing the future of Australia's car industry. Turns out my hopes of a Rudd return benefiting the industry were false... :(

[KIWI-1]

All those on this Forum who were hoping for KRudd to help out local manufacturing have just been dealt a HUGE blow.

[Road_Warrior]

Originally Posted by KIWI-1

All those on this Forum who were hoping for KRudd to help out local manufacturing have just been dealt a HUGE blow.

You say it like it is a good thing? Whatever makes you happy I guess.

[Brazen]

I think traditional fleet cars like vans, utes, Falcon and Commodores wont be affected as much as the new novated lease darlings like Mazdas and Hyundais - which basically have little to no business use.

[BroadyFord]

Originally Posted by Brazen

I think traditional fleet cars like vans, utes, Falcon and Commodores wont be affected as much as the new novated lease darlings like Mazdas and Hyundais - which basically have little to no business use.

What's stopping fleets from switching to Malibu's from Commodore's or to Corolla's from Camry's?

[jpd80]

What happened in the previous FBT changes was that vehicles travelling higher kilometres
were slugged the same 20% FPT as the people who use their car to drive to and from work..

I actually agree with actual business usage but, the reason the government adopted fixed FBT
rates was the continual avalanche of substantiation paper work drowned the taxation department...

I'd say let's, go back to the previous graduated FBT method but put the onus back on sponsoring
companies to sign stat declarations that the employee's cars are used mostly for work purposes..

[Luke Plaizier]

If they had any brains, the FBT changes would only apply to imported cars, and FBT exemptions retained only for vehicles manufactured in Australia.


Lukeyson

[nstg8a]

My housemate has a i30 on a novated lease through qld transport, she couldn't claim a single km as work use if she's honest, its sits here all week because she walks or buses to walk, and only uses the car a couple of times in the weekend.
But I'm pretty sure its partly subsidised through her work.

Originally Posted by jpd80

I actually agree with actual business usage but, the reason the government adopted fixed FBT
rates was the continual avalanche of substantiation paper work drowned the taxation department...
.

Maybe that's how he's going to create more jobs? We are all going to get jobs with the ato, sorting fbt paperwork.


(Seems weird mentioning fbt, and not talking about a lwb v8)

[Bulletime]

So my last 2 cars have been novated leases and most ppl I know have them as well. I'm still on the old system with 11% due to kms and it's a cost effective method for an employer to allow an employee to take their salary in a package.

I was planning on releasing at the 20% next year but from what I'm reading the 20% won't apply and so what for me it'll be 100% fbt??

Whether or not ppl think this is fair, the fact of the matter will be that this affects a huge amount of ppl and will change how and what vehicles people purchase, and then obviously that will have a huge effect on the car industry. Looks like now both parties are going to screw the country. Awesome....

[Bulletime]

Not to mention all the fleet companies that will now go under. Creating jobs eh...

[FPV+fteT3]

This is why I have previously owned XR8 utes and currently own an FPV ute no FBT crap to worry about.

[KIWI-1]

Originally Posted by Road_Warrior

You say it like it is a good thing? Whatever makes you happy I guess.

Not at all.

[mr smith]

More uncertainty = less confidence.

Just what the country needs.

Good work KRudd.

Bring on the election.

[zilo]

I have 8 company cars in my business.
I keep one car in my private name that is used for all my private purposes.

Have never had a problem....100% business use....no tax cheating...no sleepless nights.

Couldn't give a damn if car expenses tax cheats no longer get a free lunch.

[cs123]

Originally Posted by zilo

Couldn't give a damn if car expenses tax cheats no longer get a free lunch.

They are not tax cheats. They are working within the laws as they exist. Rather like you do as a business man. The laws are being changed.

Now a business car tax cheat would claim 100% business usage on their work ute then drive it on the weekends or take it on holiday or drive it to get lunch or drive it from home to the office.

[xxx000]

^^ we know what he means even if you're not happy with him using the term 'cheat'

[M&Ms]

The only reason I bought the GT is because I could salary sacrifice it. Less than 3 weeks in, and Rudd has quickly reminded those of us with sense exactly why we turned against him 3 years ago. Isn't this the same carbon tax that the ALP argued had no impact on our cost of living?
Useless bunch the lot of them.

[The Monty]

So this only applies to contracts entered into from today?

[cs123]

Originally Posted by The Monty

So this only applies to contracts entered into from today?

Yes, and I believe it will need to be legislated. So unless they pass the legislation before the election it will be up to the winner to decide what to do.

[turbodewd]

The FBT regime as it affects novated leases is effectively middle and upper class welfare of the worst kind. I recently came out of my lease and cannot believe the taxpayer would subsidize my maintenance costs. I dont need the help.

Rudd is completely right on this one. Its a rort. I work in IT and Im aware of people also buying dualcab 4WDs and paying no FBT either. Its a complete joke and should have been stopped years ago.

Also, Australia's balance of trade is not good in the auto sector. Anything that slows down the importation of cars is good for the economy. Only a numpty would think sending billions overseas is a good idea.