State of the Service & Environment Sacrifice

zephyr9673 said :

As a former Green, sounds like bad policy. So true the enviroment is paying for the fringe benifits of wealthy.

Teleworking, there are already tax rebates for computers, rebate public transport if there are longer distences involved.

Nothing like a simplistic, naive answer.

54037 said :

JC said :

Driving more KM’s doesn’t aide in lowering your tax brack. Salary sacrificing does this regardless of how many KM’s are driven. The issue with KM’s relates to FBT. If you drive over a certain number of KM’s (I think it is 20,000) then no FBT is payable on the benefit. Below this and FBT is payable.

I know the Australian Taxation Office website could be better designed, but here’s the REAL story with the statutory rate formula and kms driven (hint: what is quoted above is dead wrong): Car fringe benefits statutory formula rates.

Oh they have changed the rates since I leased a car 4 years ago. In my case that would now make it almost nu-economical to lease again.

As a former Green, sounds like bad policy. So true the enviroment is paying for the fringe benifits of wealthy.

Teleworking, there are already tax rebates for computers, rebate public transport if there are longer distences involved.

Georges, so what is the point of your OP? Is it about tax breaks or is it about the leasing initiative that you claim exploits the environment?

Firstly, re: tax breaks, salary sacrifice is just one of many things you can do to have your money work better for you –other things, such as super contributions and investment properties all get you more money in your pocket. You can even get tax breaks on interest for loans that you take out to buy shares. So what is the big deal? I always say you don’t work to earn money, you work to reduce your tax! Consider tax breaks similar to an economic stimulus package!

Secondly, there is the inference that if you drive more you contribute more to CO2 emissions… but is this entirely correct? As mentioned above, newer cars are more fuel efficient, provide more safety features, support the local economy (with providing an income for car dealers, automotive parts, repairers, insurance companies, etc.) and a new car ensures convenience and flexibility for travel needs. Although, technically you can novate a used-car depending on lease etc. So, without a car, if you need to get somewhere you would have to use some other form of transport. Buses and trains are obviously a choice and would be considered more efficient due to consolidated engine power and carrying capacity. But what about all the sundry costs and CO2 emissions derived from taking these other means of transport? Diesel fuel and particle pollution? And what if you caught a plane? You would need to get to the airport, cab or drive (or bus I suppose) , then use all the electricity and equipment and cafes and air conditioning that exist in and support the terminal all being produced by coal-fired power stations with a dash of wind, hydro, and solar. Not to mention use of aviation fuel to move the planes.

Saving the environment is a big issue not just to do with cars and CO2 emissions. In fact, my trusty reliable *cough* source Wiki, indicates that transportation fuels only account for 14% of annual greenhouse emissions http://en.wikipedia.org/wiki/Greenhouse_gas. Maybe we should stop tax breaks for farmers who breed cattle as they emit CO2 emissions? Oh hang on, the Government was going to give them exemptions in the Carbon Tax last year has it passed – thank goodness it didn’t IMHO.

You need to consider the whole argument not just your blinkered view.

Lastly, I lease my car and I am a contractor. I also own a tree plantation (true!) so this will offset any additional emissions that I make to get to my 25k ?.

Total storm in a teacup. Sounds more like someone getting cranky that higher income earners (who pay more in total tax anyway) are getting a minor tax break.

ClownKiller
Get some perspective Bling. Wildly over-stating what was already a weak argument does nothing.

Wildly over-stating? To give one single example (of many)one of the guys at work did 3,700km in the car over Christmas just to get that 25,000km bracket. A trip he would have otherwise not taken or flown/bussed it for. And that is just one. Combined with the many who drive to work just to do the km (and then whinge about the traffic (twits)) and there is an issue.

But if you want to sacrifice sustainable means of transport such as a bicycle or public transport tickets, then oh no, the Govt will not support you in any, way, shape or for.

Massively over stated? No, just stated…

Georges said :

Good idea since now you’ve reminded me. What time are you one today, still at Mitchell or have you been promoted to Fyshwick hun?

Georges

Honey, you couldn’t afford me…. unless you minimise your tax burden by something like salary sacraficing a car.

Talk to your tax agent.

three post nutjob.

do your own maths, I obviously suck at it today.

For driving an extra 10,001kms the employee is $2420 better off, and the gubmint is $5920 worse off.

oops – maths error.

Final gubmint loss is 13000 – 5500 – 1580 = $5780

For driving an extra 10,001kms the employee is $2420 better off, and the gubmint is $5780 worse off.

Using the caluclator on ATO:

Car worth $50,000 travels 14999kms. FBT = $13,000. Most salary sacrifice arrangements require the user to pay this amount.

Same car, travels 15,000kms. FBT is now $10,000

Same car, travels 25,000kms. FBT is now $5,500.

So to do an extra 10,001 kms will cost one service of $1,000 (it’s a nice car, see?) and approximately 1,000 litres of fuel. Say it’s at $1.30, that’s $1300. There’s tyres and extra wear and tear to consider, but these are nominal values – call it the made up figure of $1000 (4 tyres /4 & some assumed loss of resale value)

The gubmint has lost $7500 FBT revenue, the employee has gained $7500. The Employee now spends the extra $3,300 pre-tax, therefore the employee now has $4,400 higher in their package. Super comes out @ $400 (assume 10% rate so it’s 1/11th the total).

The employee’s taxable income is now $4000 higher. They have to pay tax and medicare levy. Assuming a mid-level manager or pube on around $100K, they’re paying 38% tax plus medicare levy, so of the $4000, $1580 goes to the gubmint, and $2420 goes into the pocket of the employee.

So the net…

For driving an extra 10,001kms the employee is $2420 better off, and the gubmint is $11420 worse off.

The environment is somewhere between one and two tonnes of CO2 worse off.

http://calculators.ato.gov.au/scripts/axos/axos.asp?CONTEXT=&KBS=FBT_car.xr4&go=ok

JC said :

Driving more KM’s doesn’t aide in lowering your tax brack. Salary sacrificing does this regardless of how many KM’s are driven. The issue with KM’s relates to FBT. If you drive over a certain number of KM’s (I think it is 20,000) then no FBT is payable on the benefit. Below this and FBT is payable.

I know the Australian Taxation Office website could be better designed, but here’s the REAL story with the statutory rate formula and kms driven (hint: what is quoted above is dead wrong): Car fringe benefits statutory formula rates.

‘No, I think you are an uninformed troll who needs visit a massage parlour.’

Good idea since now you’ve reminded me. What time are you one today, still at Mitchell or have you been promoted to Fyshwick hun? Georges

“…An incentive exists for those entitled to this condition of service to reside a long way from their place of work.”

Should I say what I would like to say to refute your silly point, the RA moderators would not approve my post. So, here goes my attempt at not doing that….

The OP obviously has failed to notice that the rental market in Canberra is tighter than a fish’s bumhole. The choice to live close to work is not one that everyone can make (Or perhaps fully grown adutls should be sleeping 4 to a room in 2 bedroom flats). And lets all join hands and sing the praises of our public transport system (Who can’t enjoy a 1 hour bus ride home to Gung-ugly ?).

No, I think you are an uninformed troll who needs visit a massage parlour.

Anna Key said :

I find I can easily achieve 25000km per year without living too far from work, but with all the assorted running around for kids and other household duties. I’m not sure though that the incentive exists to reside a long way from work. Admittedly if I lived in Cooma I could easily achieve 40,000km per year and get into the lowest tax bracket, but I don’t think its going to happen.

Driving more KM’s doesn’t aide in lowering your tax brack. Salary sacrificing does this regardless of how many KM’s are driven. The issue with KM’s relates to FBT. If you drive over a certain number of KM’s (I think it is 20,000) then no FBT is payable on the benefit. Below this and FBT is payable.

‘I find I can easily achieve 25000km per year without living too far from work, but with all the assorted running around for kids and other household duties. I’m not sure though that the incentive exists to reside a long way from work. Admittedly if I lived in Cooma I could easily achieve 40,000km per year and get into the lowest tax bracket, but I don’t think its going to happen… Anna Key

It’s about being in a current & priviliged circumstance, at the behest of our environment, supported by Australian tax payers such as you, Anna Key

You’ll find it’s the well heeled who go for this to the max. Georges

‘Remember also that driving to and from work does not count as work purposes – only between one workplace and another.’ caf

Thanks to a generous interpretation of aforementioned salary sacrifice / motor vehicle usage, the recipient/s of the entitlment can claim their residence as a work place (working smarter, away from the office – including weekends, paid sick leave, whatever other related perks et al) & do the 9 – 5 thing in Civic when suits. Falls conviently within your guideline caf. Just imagine, a couple who are allowed to salary sacrifice their vehicles can quite easily relocate to a cheap abode between Civic and Cooma, they’ll do quite nicely thanks to the guideline – at the behest of us who pay for the privilige & our environment. Most tax payers do not do this… because they can’t. Georges

It’s definitely that case that the current FBT arrangements encourage more driving, to make sure you don’t end up in the wrong bracket.

What most people don’t realise is why it’s set up like that. The underlying theory is that your use of the car for work purposes should be tax exempt, but private use should be subject to FBT (just as other salary-sacrifice benefits are). Remember also that driving to and from work does not count as work purposes – only between one workplace and another.

This means that the Tax Office need to know what percentage of the car’s use was for work purposes. To get this figure, they give you two options – you can either fill out a log book whenever you use the car, recording how far you drove and whether it was for work or private purposes; or you can just base it on the number of kilometres driven in the year. The (highly questionable) underlying assumption is that the more kilometres you’ve driven, the more of it was likely to be for work purposes.

Now, almost nobody in their right mind chooses the “logbook method” – mostly because, truth be told, most of us are driving very little if any distance for “work purposes”. We’d have to pay pretty much the full rate of FBT on the whole lease. The FBT discount based on purely mythical assumed “work purposes” kilometres is where most of the cash advantages of salary sacrificing a car lease come from.

At this point, those of you who do not currently salary package a car lease are probably saying “hey, what a shady tax dodge!”, and those of you who do currently have a lease (and don’t do a lot of genuine work-related driving) might well be shifting uncomfortably. Yes, it is a shady tax dodge. The reason it exists is basically a sop to the local car manufacturers, who screamed blue murder when the FBT regime was brought in by the Hawke government.

The equitable solution is probably just to remove the option of using the “statutory method” of calculating FBT. But that’s almost certainly politically unsaleable, both to the salary-packaging workers and the diminished-but-still-powerful local car industry.

I find I can easily achieve 25000km per year without living too far from work, but with all the assorted running around for kids and other household duties. I’m not sure though that the incentive exists to reside a long way from work. Admittedly if I lived in Cooma I could easily achieve 40,000km per year and get into the lowest tax bracket, but I don’t think its going to happen.

And feel free to complain about how your taxes are subsidising the transport for my kids etc etc etc

‘OMG! We’re all gonna die!

geez, pretty much every full-time permanent employee in the country is eligble to salary sacrifice a motor vehicle, this is both public and private sectors. Yes we all know cars are bad and pollute…’ BD84

Yep, we’re all gonna do that one way or ‘nother. Doesn’t mean the ATO / Treasury etc. sit back and concur with the glearing tax break, allowing many to rort the environment. Georges

‘Georges, yes it does make it okay. why shouldn’t a federal public servant have the same rights to salary package a car as any other employee?

Your argument against having to accumulate certain km per year to gain concessional tax breaks on the cars is valid, it does encourage excessive driving and that does have a negative impact on the environment. But that still doesn’t explain why you single out federal government employees?’ LlamaFrog

Paranoia abounds. The condition of service referred to in the post applies to those who do and can avail themselves of the financial advantage. The initial post did not identify a particular employer; ‘generosity of federal government conditions of service’ albeit Canberra specific. The gist of this matter rests with our current system almost promoting the misuse of valuable and diminishing resources LlamaFrog. And I again ask, ‘what have the Greens to say about it.’ Georges

Get some perspective Bling. Wildly over-statig what was already a weak argument does nothing.

Clown Killer
In most cases the FBT arrangements will require the leased vehicle to cover in excess of 15,000km a year – hardly an excessive amount of travel.

It is a massive waste if 5 of those 15,000km was not necessary, and there are greater tax breaks for the more km’s you do (for my car it is about 200g per km of CO2 produced, it adds up pretty quickly). Most people I know do long trips they would never have contemplated before every year in order to get themselves into a favourable tax break. It’s idiotic and counter intuitive.

But of course, all this is irrelevant to the deniers and out right munters that are addicted to their cars…

Georges, yes it does make it okay. why shouldn’t a federal public servant have the same rights to salary package a car as any other employee?

Your argument against having to accumulate certain km per year to gain concessional tax breaks on the cars is valid, it does encourage excessive driving and that does have a negative impact on the environment. But that still doesn’t explain why you single out federal government employees?

The scheme actually makes it more attractive to do a higher number of km’s to get a better tax break. This is the same scheme that does not allow you to salary sacrifice public transport or bicycles.

Yet more proof of just how absolutely hopeless the Federal Govt is at anything environmental. Well, that and the fact the Environment Minister appears to be more interested in performing on stage…

‘Not sure of the full point of the post, but the fact that FBT works backwards is somewhat odd.’ harley

‘Hopefully this sort of unsustainable and environmentally irresponsible salary packaging will be addressed in the Henry review of taxation.’ 54-11

enlightenment for LlaFrog

‘this is available in every medium to large company I have ever worked for? have you only just crawled out from under a rock?’

wow wee, so that makes it okay then LlamaFrogshite?

LOL… “radon” not “radium”… twit.

Yawn. It’s pretty straight forward leasing and FBT arrangements that apply uniformly across both the private and pulic sectors. In most cases the FBT arrangements will require the leased vehicle to cover in excess of 15,000km a year – hardly an excessive amount of travel.

I have no idea on what planet such arrangements might constitute “…direct and great cost to our environment.” The majority of these cars would be under three years of age and well maintained so their environmental foot print would be inconsequential compated to the vintage sh!tboxes that most ecomentalists get around in.

OMG! We’re all gonna die!

geez, pretty much every full-time permanent employee in the country is eligble to salary sacrifice a motor vehicle, this is both public and private sectors. Yes we all know cars are bad and pollute, but occasionally people like to leave their place of abode, or are required to leave their abode to travel to work. With a lack of adequate public transport and other means of transport not meeting the needs of the vast populations people will get in their vehicles to travel to work.

Alternatively, you could view salary sacrificing a motor vehicle as a good thing for the environment. The vehicles are normally leased vehicles on a lease of 2-4 years, at the end of each lease the car will be replaced. In those years, vehicles are generally more fuel efficient than the older models, which reduces greenhouse gases!

Or even more common sense, what would happen if the vehicle was not salary sacrificed? They would go out and purchase the vehicle. Net result = ZERO.

Nemo said :

Which energy source in particular is diminishing? Should I be stocking up?

Petrol. We’ve reached “peak oil”, and predictions based on growth of consumption peg the “drop dead date” at somewhere around 2070, assuming we manage to magically find twice as much oil as we knew existed in 1972. Ask Google about “The Limits of Growth”.

Of course, in the meantime there’s the fact that consumption is overtaking production, so oil will become prohibitively expensive with the price exponentially increasing somewhere in the vicinity of 2040.

In the meantime we have companies actively exploring electric vehicles (eg: Tesla Roadster).

Then there’s the nuclear lobby trying to convince us that unlimited power is worth the price of a wine-bottle sized amount of toxic and extremely radioactive waste for every man woman and child on the planet, each year.

So stock up on Uranium too, we only have about 30 years supply of that if current demand only grows at 2%.

Oh, and Thorium. The nuclear lobby will be big on Thorium reactors over the next few years, because Thorium fission has less dangerous waste (because Radium is so much easier to contain and handle than, say, helium).

So there you have it. Just stock up on coal, oil, uranium and thorium, and you’ll be set up for a comfortable (if mutated) retirement in 2080.

Which energy source in particular is diminishing? Should I be stocking up?

Hopefully this sort of unsustainable and environmentally irresponsible salary packaging will be addressed in the Henry review of taxation.

Any person can do this even if you run a small company. You can even do it outside your company through many different lease companies.

So people who do the Km’s per year cause they live outside of town, how do they get to work?? catch a bus, thats right buses run to all the small towns running let alone a regulary service.

On my 2nd car and I will not be happy if it gets taken away in the tax review.

Not sure of the full point of the post, but the fact that FBT works backwards is somewhat odd.

The tax rates for FBT go down as more miles are travelled, therefore we have the situation here where pubes take their cars on long trips just to click the mileage over the next hurdle.

I’m sure it happens in private industry, too, but our government (all over the last 20 odd years) should know better.

I think OP is suggesting changing the availability of salary sacrifice on motor vehicles for pubes. Better solution is to reward the lower use of said MVs not punish them for all strayans.

this is available in every medium to large company I have ever worked for? have you only just crawled out from under a rock?

maybe you should look into salary packaging provisions in most workplaces before you attack the federal government for offering the same benefits that the private sector gets.

This is not something that is native to Canberra, nor prublic servants.
Private enterprise around the country has enjoyed leasing cars like this for decades now. FBT was brought about to try and get some tax back from this scheme.