Company car crackdown

Thats the sort of things Socialist Governments do after they spend wildly on the lower income earners and the welfare recipients. Whats news?? Michael

Wonder if they held a focus group for labor members who salary sacrifice.
Jon W

Consider this........ every tax dollar that is avoided by means of tax perks is a dollar that will have to be paid by the ordinary taxpayer who has no opportunity to get benefit from tax perks.

Ok just to alienate everyone, the FBT exemption in Australia has always been a crock.
Very few countires in the world give tax exemptions for company cars.

AFAIK the USA doesnt.UK does a llittle I think but based on emissions and few other countries do.
These company car perks were always to support the Australian car industry and have really become something of an anachronism, seeing most fleets now allow "user chooser" and fleets no longer buy the Falcodores.All they do now is encourage purchases of Mazdas.

These tax concessions are also a major incentive for lucky executives to drive into cities and increase congestion . I recall a survey many years ago now that came to the conclusion that 60% of cars crossing the Harbour Bridge at peak hour were company registered cars.
So much for Government talking about reducing Greenhouse gases.
Regards Philip A

Mark - I would be more concerned about the 22,000 people employed by the ATO who collect the tax off hard working Aussies and then give the money to 27,000 people employed by Centrelink who in turn hand out 85 BILLION DOLLARS annually to people on welfare in this once great country !

Some people just get it better than others !

All the best

Gazz

i know someone who put there car up on jacks and let it idle in drive all night to get the k's up.

Ok. I'll bite. I have a novated lease on a Pajero. My second one in 8 years. It's registered in my name by the way - not the company and I control it's running costs etc through the fleet company. Novating it is the only way I can afford to drive a $40,000 4WD (the price paid for it when bought into the lease second hand). I'm a uni lecturer and I work by absolute ring off in the job (it's very different to what you probably imagine). 60 hour + weeks are very common, high stakes and expectations (particularly in research output required of you) and no, we dont get all the holidays off like school teachers. All this and I make quite a bit less money than the average wage a miner or a school teacher does. There is very little I can claim on my income tax... the odd private purchase of a textbook and maybe some internet usage. Our combined income is enough that we dont get any childcare benefits so we pay out $500 a week to have our youngest cared for while we try to make ends meet and meanwhile the energy bill just arrived at double what it was last year. And now this comes along.

So, my company does offer novated leasing of a motor vehicle and yes it is reasonably attractive. Yes, my income tax reduced from $30,000 a year to $17,000 a year but out of that saving I actually pay another tax called.... wait for it..... FBT! Yes, to make it worthwhile in terms of FBT I have to do 25,000km + a year (gets you into the 11% FBT bracket), and yes it probably does encourage you to drive a bit more. But you pay that 11% on 100% of the driving - there is no concession as it's use is considered 100% private & not company related even though I drive it regularly for company purposes. That's 11% of the statutory cost of the vehicle, plus something like 12% finance interest.

In our case we simply use this vehicle over our other one whenever possible and without even trying we clock 30,000km a year. But it's not like if I keep doing more KM I end up making more money. I'm paying for the vehicle through taking home a reduced wage. The more expensive the vehicle, the more KM, the less I take home. If you think Novating is essentially a free car then you are very wrong. Of course I'm angry. My car is the one tax break I get and it is about to become un-affordable for me while being locked into a contracted term.

Pat

Labour party are hopeless this maybe our recession we have to have again thankyou ju liar.......????????

Morning all,

I couldn't read every post in this thread but it seems many people are angry about this new scheme.

I mentioned this idea of mine to my Parents.

I've you decide to continue to work, let it be self employed or whatever job, after the retirement age (65?) that you should not pay any income tax. Cause I guess for some folk out there they had started work at an early age and for all those +40 years of work you have paid TAXES! I think this is fair.

1. You are not a drain on the system
2. With GST etc etc the Govt still gets taxes of you too
3. There are many capable +65 people out there to fill jobs

And I thought this idea would be great if the traveling Grey Nomads of Australia could have some part time work, seasonal work like harvesting, that that income would be tax free! Cause I see at the end of the day that's disposable income and may get spent along the journey supporting small business or whoever.

I really think that this incentive could work cause I reckon many semi retired people would work but say what's the point when you'll get stung by income Tax. I'm 33 now and have some super now gathering some pace, however in my Father's era no Super Scheme were in effect. And he was forced to retire at 60 but luckily in his industry he is still needed.

I Know my idea is a bit off topic from the original post but I've being meaning to get this off my chest on this Forum.

cheers

Matthew

Quote And I thought this idea would be great if the traveling Grey Nomads of Australia could have some part time work, seasonal work like harvesting, that that income would be tax free! Unquote

I think the government intends to raise the tax free threshold to 10K this budget from 6K. 10K is a fair bit to earn from occasional work.

Regards Philip A

Mark

The origins of the current rates of FBT are from the late 80's when FBT was introduced. Back then businesses generally picked up the FBT and it wan't shown on your group certiificate. There were some people with executive perks of a free company car, but there were also geneuine business useage. To compensate real business it the mileage criteria was introduced. Real business use olbviousl had a higher mileage than executive perk use.

Since then salary sacrifice has also been created. And this was mainly in leiu of pay increases. Remove salary sacrificing and watch the pay claims arise.

some of these extremes people go to arn't worth it, by forcing the KM's up just to get the tax benefit, you still spend money on fuel, wear an tear. Plus as the average km's per year is less than 15K, novated leased or company cars have higher mileage and you get less as a trade in.

If you cant do the mileage your better off not having a novated lease.

Already I can see ways around this, novated lease on two cars one a high value 4wd and one a elcheapo. Use the elchaepo for your running around, pay only 20% of a low value. Keep your high value 4wd for holidays and trips. As the mileage on this will be low you pay a lower % on the higher capital cost vehicle. The other additional benfit is that you high value car doesnt depreciate as much because it is not having to do 25K Km a year.

Alan

What about my situation.
I am a travelling salesman who does around 55,000 ks.
I am not on commission nor overtime.
I have private use on the company car and do around 8,000 private ks and am on the 7% statutory rate.
When I am on the road I do about 12 to 14 hour days. Lucky I do not drive a truck.
The payoff is the private use of the car.
The company does not do the log book way as it will penalise the top management.

Looks like I am going to get stung on this one.

Honky

Phew!!!!