Changes to FBT rules

[Brazen]

Also I don't think taxpayer gets much bang for their buck. The lease companies make a killing jacking up interest rates on these leases (some are over 12%) they charge admin fees, setup fees. application fees, account fees, income insurances, big commissions . They get kickbacks from the car makers and fuel companies etc and they don't really pass on their vehicle buying power.

In the end, for the amount of taxpayer support the leasee isn't getting that good of a deal especially compared to someone who visits their local credit union and just gets a 7% rate car loan which costs the taxpayer nothing.

[jpd80]

Originally Posted by FPV+fteT3

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

Be careful, as the ATO most likely will be insisting on it being 1 tonne carrying capacity to comply with non-FBT.
Although they seem to allow XR6T last year.....

[2011G6E]

"End the love affair with dual cabs"...? Not bloody likely.

Not when you consider the price you can get them for compared to a sedan, and how basically more useful than a "car" they are for a lot of people both in...and especially out of...the cities.


Finance rates from the companies are getting stupid as well...which car company was it the other night on TV that was advertising 0% interest on car finance?

[FPVF6X201]

Originally Posted by 2011G6E

Finance rates from the companies are getting stupid as well...which car company was it the other night on TV that was advertising 0% interest on car finance?

Toyota.

[Guzz226]

The headlines mention claiming back $1.8B in tax (FBT?) - does this allow for all the folk who will no longer lease at all meaning the government will now forgo that FBT revenue?

If they didn't kill it by jacking up the FBT rate/mileage mix a few years ago, they have now. Would hate to be working in either the automotive or leasing industries as I think tough times are ahead - certainly a drop off in repeat business as folk buy and hold longer rather than lease and turnover.

[Brazen]

Fleetpartners understandably not entering into new novated leases at the moment.

http://www.fleetpartners.com.au/nova...d-fbt-changes/

[vanman_75]

Signed up for a ranger xlt today ...lucky I didn't get the cruiser...
On the tax side people don't really rob tax payers , I pay 50 k tax a year , they are just benefits for people who do pay a lot of tax into the system ....creates new car sales / jobs / etc etc , I never expected tax breaks as a low income earner that's how it rolls ...this will hurt all the manufacturers great work govco ya twits

[gtfpv]

STAUNCH LABOR SUPPORTER HERE .

And i have to say this is wrong on all levels . i bought my xr6 in jan this year after it came off lease , rather than re lease , which i would've done if the GOVT hadn't 1st changed the fbt rates to A FLAT 20% over the 11% I was getting on my lease .
when the GOVT done this i seen the END OF FORD AUSTRALIA coming and perhaps all aussie car manufacturers . AND LOOK WHAT HAPPENED .
Now to go even further not even the small darliong cars will be leased anymore . this will put many out of work . SORRY THIS JUST ISNT ON BY ANY GOVT .
IT wont stop me voting labor cause i fear much worse from the liberals , however what labor have done with fbt is just WRONG on every level .
wether you agree with business purposes or not , fact is people were leasing cars which was good for vehicle turnover of new cars . thats now down the gurgler .

[Smoke Pursuit]

You guys that have dual cabs/utes do know they aren't 100% deductible unless your personal use is minor or infrequent don't you? Just be careful and make sure your not over doing the personal use, because they definitely aren't 100% deductible unless you can substantiate your personal use through another vehicle or some form of records.

[jpd80]

Also, the FBT is based on a flat 20% of the base value of the car and is kept at that level for four years.
lease a $40,000 car and you pay $8,000 FBT a year on top of running costs and over four years,
you end up almost paying for the car again in taxes..

[KIWI-1]

Originally Posted by 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.

Why not remove these rorts as well?

Tax-free items
Employees of public hospitals, private not-for-profit hospitals or a Public Benevolent Institution don't have to pay the Fringe Benefits Tax on a whole lot of items that would normally incur FBT!
If you are a hospital or PBI employee you can package any combination of these items, but keep in mind there’s an annual limit to how much you can spend. To find out your limit, call us on 1300 476 278.
Living expenses card
Imagine buying almost anything you want with a debit card that makes your own pre-tax dollars available to spend anytime, anywhere.
Loan and mortgage repayments
Have you got a personal loan or mortgage? Cut down the expense by packaging a portion of your repayments tax-free!
Rent
Rental prices might be on the rise, but you’ll see huge savings if you’re paying some of your rent from tax-free dollars.
Credit card payments
Why not use your tax-free dollars to make credit card repayments?
Bills and more
Want more options? There are so many things you could pay for with your tax-free dollars. Take a look and see where you can save.

Smartsalary Meal Entertainment Card
Let us know how much you’d like your employer to regularly set aside from your pre-tax salary every pay period. We’ll transfer those funds to your Meal Entertainment Card.
You can use the card with your family, friends or colleagues if you’re dining at a restaurant or café, eating in at a fast-food restaurant or buying dinner at a club or pub.
Basically it’s a Visa debit card that gives you access to your own pre-tax dollars. All you have to do is present the card at the end of the meal to make a payment. Just swipe, sign and save – it’s that simple.
Only available to employees of a public hospital, private not-for-profit hospital, aged care facility, public ambulance service or ATO approved charity*.

http://www.smartsalary.com.au/

[M&Ms]

Originally Posted by jpd80

Also, the FBT is based on a flat 20% of the base value of the car and is kept at that level for four years.
lease a $40,000 car and you pay $8,000 FBT a year on top of running costs and over four years,
you end up almost paying for the car again in taxes..

Yes, but the fact most working class people will save about 30% on tax, plus with most fleet companies, all costs are GST exclusive, you are still about 20% in front. I did the maths, and in my situation, I was better off leasing over a 24 month term than buying outright.

[Resurrection]

Originally Posted by 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.

Another kick in the guts to the three local car makers.

[syzygy9]

Originally Posted by M&Ms

Yes, but the fact most working class people will save about 30% on tax, plus with most fleet companies, all costs are GST exclusive, you are still about 20% in front. I did the maths, and in my situation, I was better off leasing over a 24 month term than buying outright.

Ditto - I come out marginally ahead with (the current) leasing (arrangements). The changes mean for me personally, rather than leasing a new SZ Territory in Feb-14 when the current lease runs out, I will look at purchasing a much cheaper (smaller) car which will probably mean an import.

Not good for the economy, poorly thought through and with repercussions extending way beyond the short term cash grab. I also doubt the extra tax will actually be raised; in my case my 20% FBT contribution will end up as income tax while the purchase dollars will go to an imported vehicle (unfortunately).

[ILLaViTaR]

awww no more leather seats and turbo's to haul old bricks and filthy mixers around in. 25% won't solve the issue of tax fraud the small business sector alone costs the country 40 billion a year. That's what they're trying to address.

[flappist]

Originally Posted by ILLaViTaR

awww no more leather seats and turbo's to haul old bricks and filthy mixers around in.

No actually no more cheap 3 year old low kilometre second hand V8 and T6 or even ecoLPi sedans at the auctions and on dealer lots.

[JutroXR8]

Looks like second hand vehicle prices will go up. Given less new vehicles will be purchased, that means more old bombs will stay on the road longer. Therefor, the rate at which safer and more fuel efficient vehicles filter through will be less. Ditto all the other comments regarding jobs and the local car manufacturing industry.

Ah well. I really did like Rudd. Now I just think he is a dud. Pardon the pun.

[flappist]

Originally Posted by JutroXR8

Looks like second hand vehicle prices will go up. Given less new vehicles will be purchased, that means more old bombs will stay on the road longer. Therefor, the rate at which safer and more fuel efficient vehicles filter through will be less. Ditto all the other comments regarding jobs and the local car manufacturing industry.

Ah well. I really did like Rudd. Now I just think he is a dud. Pardon the pun.

No there will still be plenty of cheap second hand 3 year old low kilometre vehicles available only they will be turbo diesel 4 and N/A 6 4 door utes like Ranger and Navara.

[tweeked]

Why don't they just do something easy to administer, and supporting local manufacturing?

Change the 20 percent rule to 40 percent. Then exempt any vehicles locally manufactured from FBT.....

Bit too simple I would suspect.

[KIWI-1]

Admin will not be an issue...
Announcing the changes, Treasurer Chris Bowen said:
"The rule stipulates that it is necessary to keep a logbook for up to 12 weeks over a five-year period, but this can now be done through mobile phone technology and applications which are easily downloadable on the web."

[MAD]

Each gov seems to try and fix a small section of our tax system, and it always seem to do very little while costing a lot to administer. Then the next gov tries to fix another small bit, and so on, and so on until we have the confusing tax system we have today, that has so many holes in it that the gov is losing tons of income.


What about the old suggestion of doing away with income tax (and all the deductions that go with it) and increase the GST, so it is user pays. The more you spend, the more you pay. No escape, even for those that end up with a taxable income of $2 p/a.

I'm no tax expert but this always seemed like a good suggestion to me. Simple and sounds like it would be effective.

[BroadyFord]

Both Toyota and Holden warning today of the devastating impact this will have on local manufacturing. Also, most of the big leasing companies have suspended new car sales until further notice as they assess the impacts of this. This feels just like when Gilllard announced an end to the GCIF, also practically overnight without consultation. I don't know what's worse.

I can see the doors at Elizabeth and Altona slowly closing... Looks like Ford bailed just in time!

[Smoke Pursuit]

Originally Posted by jpd80

Also, the FBT is based on a flat 20% of the base value of the car and is kept at that level for four years.
lease a $40,000 car and you pay $8,000 FBT a year on top of running costs and over four years,
you end up almost paying for the car again in taxes..

$8,000 in FBT? Don't you mean $3,720 in FBT?

the 20% is the taxable rate.

46.5% of that is the tax payable.

[vanman_75]

Just called leaseplan for paperwork , all lease companies have put a hold on any new lease , I'm to call back in two weeks , just called ford they were unaware but hes going to look now as it will kill sales ! Car is on hold Bugger :/ ...
Would like to be a fly on the wall , bhp and other big companies are Gunna tear em a new 1

[Anchor]

I'm guessing you just spoke to Benny vanman 75?

SG Fleet have done the same.

[PepeLePew]

Step back, take a breath, and think 'is this really a time when the government should do ANYTHING that will impact new car sales' when local manufacturing is heading south?

I nearly choked on my toast.

[GT0132]

Originally Posted by DASH GT

$8,000 in FBT? Don't you mean $3,720 in FBT?

the 20% is the taxable rate.

46.5% of that is the tax payable.

It's actually $7,440 rounded because of the 2 x "gross up" that is applied if that was still happening , stand corrected if not .

$40k x 20% x 2.0 (or threabouts) x 46.5% = $7,440

[Brazen]

Didnt the novated lease end up changing buying patterns away from local cars anyway?

I thought that instead of the old days of a company buying a 100 white Falcons or Commodores and getting employees to keep a logbook, they all started incorporating salary packaging instead and had employees novate lease a car they wanted - like a Mazda 3 or a dual cab?

[GQ_Smooth]

Has been said previously, middle and upper class welfare. Conceptually I agree with the decision, but don't enough of the finer details to be conclusive.

Surprised with Toyota's reaction, but they would have a better idea than me.

This will affect BMW, Merc, Audi big time, might finally get them out of the top 10.

[BroadyFord]

Looks like the rout has already started:

Carbon tax: Car industry raises hackles over reform

http://www.goauto.com.au/mellor/mell...257BAB001498FC

AUSTRALIA’s car industry has reacted angrily to sweeping changes to the way business cars are taxed.

Industry advisers, lobby groups and social media all came alive yesterday questioning the outcome of changes that will help to fill a $3.8 billion hole in the federal budget following the proposed axing of the fixed-price carbon tax, announced yesterday.

Brett Fowler, a director at accountancy and business advisers Moore Stephens Automotive, said in an industry advisory distributed today that the statutory formula method of calculating fringe benefits tax on cars was originally introduced to reduce the administrative burden to employers and employees.

“Without this method being available, there will be a significant increase in administration which will discourage many potential salary-sacrificed vehicle options,” Mr Fowler wrote.

“This will most likely impact sales of new vehicles, particularly fleet arrangements.

“A further impact on the industry which remains unclear from the announcement, is whether the existing ruling governing fringe benefits tax calculations for vehicles supplied to employees of retail automotive dealers ... will remain in play.

“This ruling adopts the statutory formula method and it would therefore seem to be at risk of future application,” he said.

A separate advisory issued today by FleetPartners questioned how customers would have to deal with end-of-lease options where the original lease was extended, or the car was refinanced.

“Either of these transactions may amount to a 'material change' that would mean should the proposed legislation become law, the tax implications of the proposed changes would be backdated to July 16, 2013,” it said.

The novated lease industry has already flagged it is poised to shed staff in the wake of the tax changes, with Paul King, managing director of salary packaging firm Selectus telling BRW he was considering laying off 100 staff as early as this week.

He has predicted about 2000 job losses across the industry.

The Victorian Automotive Chamber of Commerce said it was “very concerned” that the changes to the fringe benefits tax would result in fewer new-car sales and more red tape for small businesses.

“Only last month, the repair, service and retail sector of the automotive industry called for more consultation and recognition from the government,” VACC executive director David Purchase said.

“A few days later, the Labor Party changed leadership, but clearly has not changed its attitude towards the automotive industry.

“Labor has introduced a new policy, which will have a significant impact on the automotive industry, without consulting us,” Mr Purchase said.

“Not for the first time, VACC members and members of the automotive industry are grappling for information and trying to second-guess the changes they’ll have to make.”

A source who did not want to be identified said the changes were likely to significantly harm the car industry.

“It will kill the car industry,” the source said. “There will be a massive change to all company cars with businesses now giving car allowances rather than company cars/salary packaging.”

“It’s turning it into a class war,” said another.

Social media exploded with reactions from the car industry’s coalface.

“Went to work to see people cancelling lease vehicle orders as fast as they can. Well done (Kevin Rudd) – hit the vehicle industry again,” one Twitter post said.

“Seems like Ford made the right decision in Australia after all, since Labor's inspired answer to one tax is to add another,” said another.

Yet others told Holden that plans to buy cars had been placed on hold.

“I was going to buy the new VF Commodore on novated lease – now I won’t be because of Kevin Rudd,” one user said.

“Was planning to buy a new Holden Commodore but FBT changes have stopped that. Be keeping the old Sube ‘til it falls apart now,” revealed another.

I'm predicting production at Toyota and Holden will grind to a halt within weeks with workers being stood down just like at Ford during the CMI saga.

This will end in one of two ways: permanent closure of production at both Holden and Toyota, and thus the end of the car industry, or the government realising it has made and error and backtracking on this announcement.