As Kevin Rudd makes wild drastic policy changes to fund his easing up on carbon pollution (like getting rid of 800 senior public servants) they’re also messing around with salary sacrificing to buy new cars (the only reason to buy a new car compared to the bargains in the second hand market).
With many Canberrans having availed themselves of the old arrangements (and many planning to) Easifleet have sent us their advice, which they’ve sent to their customers:
Important information regarding your Novated Lease
The Government has announced that it plans to terminate carbon tax and implement an emissions trading scheme. Part of the plan to fund this is to abolish the statutory formula for Fringe Benefits Tax on cars, this means that (if it is implemented) FBT would no longer be calculated based on 20% of the FBT value of the car, but instead on the Operating Method, i.e. based on actual business use.
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This change, if implemented will not affect current lease holders unless there is a material change in your lease agreement, this may include changing employer.
Novated Leasing under this scheme will change significantly and require new lease holders to monitor their work related kilometres and tax savings will be calculated on verified work usage only. People will be required to keep a logbook for 12 weeks to monitor business usage and will only be able to claim that business usage pre tax. Currently people have the choice of using the Statutory (20% of FBT) Method or the Operating Method.
By way of a practical application to explain business usage and the impact to Novated Leasing. If a Nurse, Police Officer or Local, State or Federal Government employee drives to work, parks their car, spends a day working and drives home they will have 0% business use and 100% personal use and will not receive any benefit from salary packaging a car. The thousands of dollars per year that they are currently saving from Novated Leasing will no longer be available to them.
Easifleet is still providing our customers with Novated Lease quotes based on the 20% statutory fraction with the expectation that the Government will realise the significant impact that this proposed change will not only have on people interested in getting a new Novated Lease, but also the flow on effects to car dealerships, car manufacturers, salary packaging companies, finance companies and the thousands of people that they employ.
If you disagree with the proposed change I urge you to call Chris Bowen’s office on 02 6277 7340 and register your disapproval with this proposed change.