Changes to FBT rules

[flappist]

Originally Posted by 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.

No actually it will not affect them much at all. Look at any Telstra car park or the like. These are full of Commodores, Falcons and shoeboxes not Mercs and Audis etc.

Those who play at the high end have much more clever ways to claim their $300k supercars.

This plot will kick a lot of tradies, contractors, small business owners and lower management people in the guts nothing more.

The real result of this with regard to small business owners is that if the car costs more then they will either buy a cheaper car or a ute which will be one less second hand FPV/HSV/XR/SS in 3 years or they will reduce their overheads in other ways, one being reducing the number of employees.

How can any of this be good for Ford enthusiasts........

[Dr Smith]

I'm going to be tough here and say if it's a work vehicle used fully for work faiir enough, if it's a vehicle bought and your minimising your taxable income pretending it has work duties when it doesn't bad luck. If running a log book for 12 weeks to save you thousands is too much work then bad luck. I'd say there is more rorting then understood and if it is worth it do the extra paperwork. And before anyone asks I have work vehicles and private ones, if I was audited on them I don't have anything to fear, then again I'm in manufacturing and we are a dying breed.

[rods falcon]

Originally Posted by Dr Smith

I'm going to be tough here and say if it's a work vehicle used fully for work faiir enough, if it's a vehicle bought and your minimising your taxable income pretending it has work duties when it doesn't bad luck. If running a log book for 12 weeks to save you thousands is too much work then bad luck. I'd say there is more rorting then understood and if it is worth it do the extra paperwork. And before anyone asks I have work vehicles and private ones, if I was audited on them I don't have anything to fear, then again I'm in manufacturing and we are a dying breed.

Yes fair enough with the work versus private %, but as well as a log book being completed interest has to be calculated at the FBT rate and not the actual rate and the depreciation amount applied may be a different rate, making the calculation rather complex and this I why many are saying there will be a lot more additional paperwork. All expenses have to be kept track of.

[BroadyFord]

Informative article on how and why this will destroy local manufacturing:

Axing tax benefit threatens Holden’s survival


http://indaily.com.au/opinion/2013/0...dens-survival/

COMMENT | The decision to terminate the statutory formula method under the fringe benefits tax regime will have significant ramifications for the car industry, the local car manufacturing industry and employment.

The move, part of Prime Minister Kevin Rudd’s announced $3.9 billion of cuts or deferrals to government spending to help the transition of the carbon tax to an emissions trading scheme, will bring a saving of $1.8 billion over the forward estimates.

As highlighted in the Bracks review, more than 50% of new cars are acquired under the car benefits tax regime and at least 75% of domestic sales of locally produced vehicles are to government and business sector. Will businesses still buy locally produced vehicles once this tax regime is terminated?

The statutory formula method was introduced in 1986 under the Button Plan to protect the economic viability of the Australian motor vehicle industry. It was indirectly designed to support the local car industry through subsidising vehicle cost. Axing this benefit may make car manufacturers of large vehicles such as the Holden Commodore no longer sustainable.

It is hard to believe that the Australian automotive industry had been consulted on this latest announcement. In the past, the local car industry has rejected any proposal to reform the statutory formula method or any suggestion of removing the car benefit altogether.

For example, Holden expressed their concern to the Henry Review that the operation of the FBT system was vital to the sustainability of the local industry and “without the car FBT concession, there would be little incentive to offer cars as fringe benefit, and employees left to their own devices would be more likely to buy imported vehicles”.

The same was argued back in the 1999 Ralph Review of Business taxation, when the local car industry argued “… any tightening of the formula would damage its sales and encourage employers to choose cheaper, imported cars”. The 2009 Senate Standing Committee in Rural and Regional affairs and Transport believed that support to the Australian MVI extended to the car FBT concession.

In 2009, the Federal Chamber of Automotive Industries urged the Henry Review to carefully consider the implications of their recommendations to Australia’s car industry and the effect that changes to the statutory formula method might have on purchasing decisions by business.

Past submissions and reviews do not support Industry Minister Kim Carr’s assertion that cutting the statutory formula method will not have an adverse impact on Australia’s car industry. The tax changes may prompt Holden to finally decide that manufacturing in Australia is no longer sustainable, which will inevitably lead to job losses. Further job losses may also arise in the automotive industry, given at least half of all new vehicles are acquired under the fringe benefits tax regime.

In terms of environmental policy, axing the statutory formula method is a good policy because it indirectly reduces road transport carbon emissions and reduces the number of vehicles acquired each year. Australian taxpayers will no longer be subsidising the cost of high carbon emitting vehicles, which are mostly acquired under the FBT regime.

A 2009 study by Copenhagen Economics found that the car benefit tax regime increased the number of cars being purchased, which were mostly bigger and higher-emitting vehicles. Evidence in the National Transport Commission’s 2012 Light vehicle emissions report also found that new passenger vehicles acquired by business and government have higher emissions than new vehicles acquired by private consumers.

Axing the statutory formula car benefit maybe a good decision for the environment, but what will be the economic and industrial fallout from removing this subsidy? Did the Australian government consider the impact of its policy decision, or was it made on the run?

[Fordman1]

I'm tipping this will be "the straw that breaks the camels back".

Mark my words Holden will pull the plug because of this. I think there will be announcement late this year.

[FGXR6TUTE]

Originally Posted by BroadyFord

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

Don't we need to promote the locally produced vehicles, i.e. Falcon, Commodore and Camry?

If the Gov't were serious about looking after the local manufacturing, they should look at reducing FBT and / or luxury taxes on the local vehicles as an incentive to buy local.

[PepeLePew]

A lot of talk about work vs private....

I think we need to remember that on the most basic level novated leasers on the stat method are just normal working people offered a benefit by their employer that offered them the opportunity to upgrade to a better, and often new, vehicle. They were also often people that lived quite distant from their place of work and were taking advantage, previously, of the 25000kms+ bracket. They weren't trying to rip anyone off. Life just got a whole lot more expensive for them. They aren't nefarious, plotting, doing anything illegal. Just plain old taxpayers like everyone else trying to find ways of maximising their income for themselves, and their families, when the world seems intent on bending us all over these days. Life isn't too cheap in Australia these days....

[Outbackjack]

Originally Posted by mr smith

More uncertainty = less confidence.

Just what the country needs.

Good work KRudd.

Bring on the election.

There was a note in the first post to keep your political views to yourself. Do you have difficulty reading????

[Brazen]

They should push for an Australian-made exemption.

Interesting Kim Carr said this in relation to the FBT changes.

“In the context of industry seeking to revamp the automotive assistance package it is only appropriate that Australian manufacturers are not excluded from whole of government measurers,’’ he said.

Suggests that local car makers can expect something in return.

[Kieron]

Originally Posted by PepeLePew

A lot of talk about work vs private....

I think we need to remember that on the most basic level novated leasers on the stat method are just normal working people offered a benefit by their employer that offered them the opportunity to upgrade to a better, and often new, vehicle. They were also often people that lived quite distant from their place of work and were taking advantage, previously, of the 25000kms+ bracket. They weren't trying to rip anyone off. Life just got a whole lot more expensive for them. They aren't nefarious, plotting, doing anything illegal. Just plain old taxpayers like everyone else trying to find ways of maximising their income for themselves, and their families, when the world seems intent on bending us all over these days. Life isn't too cheap in Australia these days....

Everyone I know who has a novated lease are doing the above including me. For sure, if there are people fudging the work/private use figures, slam em but as has been discussed, the losers in this move will be the new car segment of the auto industry.

Benefits would potentially be spare parts suppliers/wreckers and mechanical workshops as many may now keep their cars longer and I guess the Aus environment will be better off as the polluting local car manufacturers will almost certainly close shop.

[Dr Smith]

Originally Posted by rods falcon

Yes fair enough with the work versus private %, but as well as a log book being completed interest has to be calculated at the FBT rate and not the actual rate and the depreciation amount applied may be a different rate, making the calculation rather complex and this I why many are saying there will be a lot more additional paperwork. All expenses have to be kept track of.

I can really appreciate this however if you are running a real business you already need to keep track of any and all expenses. I've got a room full of stuff waiting for the obligatory 5 years to roll over. I would imagine if it doesn't already exist that an app for android/apple/pc is on the way.

[mr smith]

Originally Posted by Outbackjack

There was a note in the first post to keep your political views to yourself. Do you have difficulty reading????

OK Mr Forum policeman,
who should I credit this change to the FBT to?

[KIWI-1]

Already fish & chip wrappers - not mentioned on the major news bulletins tonight.

[mr smith]

Originally Posted by KIWI-1

Already fish & chip wrappers - not mentioned on the major news bulletins tonight.

On todays talkback it was the No1 topic. This will be rolled back IMO.
Even people who don't have a lease vehicle believe its stupid. Lets sacrifice a whole industry so one person can say they scrapped the carbon tax.

[jpd80]

Originally Posted by rods falcon

Yes fair enough with the work versus private %, but as well as a log book being completed interest has to be calculated at the FBT rate and not the actual rate and the depreciation amount applied may be a different rate, making the calculation rather complex and this I why many are saying there will be a lot more additional paperwork. All expenses have to be kept track of.

No, if you declare actual business usage then that replaces the 20% FFT rate,
employees are given their annual vehicle package and so the leasing outside
Novation and avoid FBT but have to pay the difference on running costs whilst
applying for a 221D tax variance.

Rudd is counting on private usage being higher than the current 20% FBT nominal rate
but people who do +30,000 may get their lower % back thanks to log books..

[Brazen]

Originally Posted by mr smith

On todays talkback it was the No1 topic. This will be rolled back IMO.
Even people who don't have a lease vehicle believe its stupid. Lets sacrifice a whole industry so one person can say they scrapped the carbon tax.

I don't think it will be rolled back, as it would be an embarassing confirmation that it was policy on the fly. I think maybe it will be transitioned gradually in over the next few year instead of straightaway.

[KIWI-1]

Originally Posted by jpd80

Rudd is counting on private usage being higher than the current 20% FBT nominal rate
but people who do +30,000 may get their lower % back thanks to log books..

So it will raise as much as the mining tax?

[ILLaViTaR]

Originally Posted by flappist

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.

But that's kind've an issue to ie. how "disposable/little value" these cars have to their owners because of the tax benefits (especially when the benefits are abused). If they held onto them a bit longer the country would be much richer by the billions. Although a 3 year old car under 20k is a dream for someone like me, I'd prefer the government give me back half my tax for it.

Imagine if PAYG earners received the same/similiar tax benefits for a company car/transportation to and from work. My father pays 47% on the dollar to the government full time with no vehicle entitlements while they pay 30% flat and then receive the vehicle benefits on top. Fact is he actually pays 30-40k in tax per annum can't even claim his own work clothes let alone a car while most small business pay less tax overall and receive all these entitlements. A 3yr old V8 is a kick to the teeth to him when he contributes more and never got the feeling of owning a new car (something that's bothered him that others take for granted). A feeling that soon gets old for business owners once these cars start getting recycled. I don't see how he is any less entitled to it than them.

My neighbour owns a window trade he inherited from his parents. He has claimed a Holden grange, 90k+ BMW (wifes) and a 4x4 ute (must be doing windows in bunyip state forest).

Now he has appointed his wife as the "company director" to the business and as far as the ato is concerned she works full time hours from home... Well reality check she's a housewife who sits in the pool outside (probably a tax deduction too somehow) sunbaking all day while the BMW and grange sit in driveway everyday depreciating away but then of course depreciation on such a high asset is nullified to them obviously as the depreciation is probably flat rate or some crap so they pull more tax back from a vehicle with a greater depreciation). I'm sure this is highly illegal particularly the company director housewife front, however everyone does it (that's the mentaility).

[Fordman1]

Originally Posted by KIWI-1

Already fish & chip wrappers - not mentioned on the major news bulletins tonight.

Yep ....

Just what you wanted ..

[mr smith]

Originally Posted by Brazen

I don't think it will be rolled back, as it would be an embarassing confirmation that it was policy on the fly. I think maybe it will be transitioned gradually in over the next few year instead of straightaway.

I think that Labor need to win the election?

[KIWI-1]

Here's your answer ILLaViTaR

Originally Posted by MAD

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.

[pajoda]

I am one of those on PAYG with a novated lease, it was line ball for me to go with a lease or manage myself, it's no gravy train. Before we all get to excited the next lower house sitting day is likely to be after the next election anyway, what's Tony's position? Whether we like it or not that is where the focus should be.

[KIWI-1]

Originally Posted by pajoda

Before we all get to excited the next lower house sitting day is likely to be after the next election anyway, what's Tony's position, whether we like it or not that is where the focus should be

Tony (and Kevin) will sit quietly in the corner and wait for tonight's private polling, tomorrow's focus group responses, etc.

[pajoda]

Originally Posted by KIWI-1

Here's your answer ILLaViTaR

Concept makes sense until you factor those on benefits and pensioners, a whole other debate comes to the fore.

[whynot]

Oh, dear. Well, that torpedoes the plan for the next lease to be a V8 Falcon. Truth be known, ending the lease will probably save me money in the longer term. Instead of changing vehicles every two years, I’ll quit the in-house lease, catch the train into work, and take home the truck when on call. Sure, the tax man takes more out of my wage. But I will pocket the surplus from the lease. The next effect will be a reduction in my expenditure on vehicles. Which is something I am sure the automotive industry and the present government wants.

[xxx000]

Originally Posted by mr smith

On todays talkback it was the No1 topic. This will be rolled back IMO.
Even people who don't have a lease vehicle believe its stupid. Lets sacrifice a whole industry so one person can say they scrapped the carbon tax.

Talkback radio is driven and steered by the presenter NOT by the audience

It's always about creating fear and anger by whatever means

In Sydney, and I'm sure elsewhere, its sole purpose seems to be to get the Libs into government so of course it would have seemed all negative towards this change

[Guzz226]

So how much would my lease change by?

I have a standard lease now - 20% stat - what does it now become? Academic really as I had already decided against another given the changes that almost doubled my tht in recent years - 11 to 20%

Just haven't seen how much the standard $30k car on a 2k lease will now cost extra

[pajoda]

Originally Posted by Guzz226

So how much would my lease change by?

I have a standard lease now - 20% stat - what does it now become? Academic really as I had already decided against another given the changes that almost doubled my tht in recent years - 11 to 20%

Just haven't seen how much the standard $30k car on a 2k lease will now cost extra

I am with you Guzz, waiting for a case study, might just buy out my ST if this happens, and if knowing what's coming might start modding knowing i will buy at end of lease. Something exciting about that, takes me back to my youth.

[zilo]

Any car manufacturer who is relying on consumers tax minimising to buy their products can go back to America or Japan or Korea or Germany or wherever....

Not doing us any favours in the long run....really.

Hiding behind manufacturing is taking with one hand and giving crumbs back with the other.

[Smoke Pursuit]

Originally Posted by zilo

Any car manufacturer who is relying on consumers tax minimising to buy their products can go back to America or Japan or Korea or Germany or wherever....

Not doing us any favours in the long run....really.

Hiding behind manufacturing is taking with one hand and giving crumbs back with the other.

Its not just the manufacturers though...

What about the dealerships, lease companies, after market companies etc.