What Kevin’s mad thrashing means to your novated lease

johnboy 18 July 2013 63

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.

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.


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63 Responses to What Kevin’s mad thrashing means to your novated lease
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milkman milkman 11:37 am 20 Jul 13

Althought this is annoying for some, weaning Australia off middle class welfare is a good thing longer term.

Diggety Diggety 5:16 am 20 Jul 13

Diggety said :

Long term subsidies….. It’s really the modern day Aus.

Trust me, we’re fucked if we follow this MO.

Individuals, businesses, industries, politicians.. anyone involved in Australia needs to reconsider the hand-me-out mentality of yesteryear.

(apologies)

Diggety Diggety 4:52 am 20 Jul 13

Long term subsidies….. It’s really the modern day Aus.

Trust me, we’re f***ed if we follow this MO.

Individuals, businesses, industries, politicians.. anyone involved in Australia needs to consider the hand-me-out mentality of yesteryear.

Roundhead89 Roundhead89 4:14 am 20 Jul 13

Postalgeek said :

kagey said :

Why does “it’s a rort” sound like class envy here?

Here’s a completely unsupported hypothesis that will make your brow furrow: what if some of the critics of middle-class welfare were middle class. A form of class green-on-blue, if you will.

Talking about middle class welfare, I note the sentence given to the mother of Kiesha Wieppart – a Mt Druitt woman who had a child she couldn’t afford or care for due to having $5500.00 dollars waved in front of her in the form of the Howard government’s Baby Bonus in 2005. Countless babies murdered and dumped in bins as the low life bogans (“Howard Battlers”) were pandered to in one of the worst pork barrelling exercises on record.

If Kevin Rudd apologised to the Stolen Generation will Tony Abbott apologise to the murdered generation?

thatsnotme thatsnotme 11:43 pm 19 Jul 13

JC said :

kagey said :

Why does “it’s a rort” sound like class envy here?

I used the term myself AND I lease and have leased in the past. So does that make me envious of myself?

Bottom line the whole thing had very sound intentions when introduced (just like negative gearing), which was to keep the local industry going without the direct money they have now given to them, but when they changed the laws so the rules applied to non Australia made cars the whole thing became a rort.

I mean to say this whole statutory method is making an assumption that there is a level of business use. I will tell you know neither my current nor previous cars EVERY saw any business use so please explain how that is not a rort?

How do you figure that the statutory method assumes some business use? Do you have a link, because I can’t find anything that says other than the statutory method simply not differentiating between business and private use.

All this ‘it’s a RORT’ stuff just sounds ridiculous to me. Even based on the definition given earlier – work (a system) to obtain the greatest benefit while remaining within the letter of the law. Nobody who is taking out a novated lease is working the system at all. Nobody is having to find loopholes, or jump through any hoops to gain the benefits that are proposed to be removed – they’re simply making use of perfectly legal options to get a car. It’s not like this is something new – people have been salary sacrificing this stuff for years. Businesses have grown up around this option. Anyone would think that to take out a lease, you needed to know how to contact just the right company and know the secret handshake…

I don’t even particularly care about this change – I leased 7 or 8 years ago, haven’t since, and can’t see myself doing it again any time soon regardless of whether this change happens or not. ‘It’s a rort’ doesn’t sound like class envy at all to me – just incorrect use of English.

JC JC 9:33 pm 19 Jul 13

kagey said :

Why does “it’s a rort” sound like class envy here?

I used the term myself AND I lease and have leased in the past. So does that make me envious of myself?

Bottom line the whole thing had very sound intentions when introduced (just like negative gearing), which was to keep the local industry going without the direct money they have now given to them, but when they changed the laws so the rules applied to non Australia made cars the whole thing became a rort.

I mean to say this whole statutory method is making an assumption that there is a level of business use. I will tell you know neither my current nor previous cars EVERY saw any business use so please explain how that is not a rort?

Postalgeek Postalgeek 9:30 pm 19 Jul 13

kagey said :

Why does “it’s a rort” sound like class envy here?

Here’s a completely unsupported hypothesis that will make your brow furrow: what if some of the critics of middle-class welfare were middle class. A form of class green-on-blue, if you will.

kagey kagey 8:23 pm 19 Jul 13

Why does “it’s a rort” sound like class envy here?

Anyway, what I was going to say was :
While the economic impacts might be many and varied, it is interesting to see that the Kruddler mark 2 has impacted several sectors in this thought bubble. Vehicle manufacturing, vehicle leasing, and the public service (including teaching, nursing, police). Vehicle manufacturing and the public service are two of the sectors in Australia that remain significantly unionised. Correct me if I’m wrong but I thought unionised workers were the natural constituency of the ALP. On first impression, this looks like the ALP could care less about the voting intentions of these workers. The question is why would the ALP seem so casual towards this constituency – are they that rusted-on? The unions remain a significant channel of donations to the ALP after all, and fewer union workers means lower donations. I can’t see the political upside to this unless the ALP thinks it can win more votes by reducing the carbon tax than they will lose through sticking a fork in novated leasing.

IrishPete IrishPete 8:05 pm 19 Jul 13

chewy14 said :

OK the ‘class warfare’ schtick is bogus and there’s myriad tax concessions, loopholes and benefits that should be scrapped but even you must realise there’s a difference between taking more revenue off productive citizens vs cutting benefits to non productive citizens.

They produced children…

IP

bigred bigred 5:14 pm 19 Jul 13

Moving a group of welfare recipients to a program paying less for good policy reasons is a bit different yo a raft of measures targeting a certain class of folk at the household bottom line is a declaration of war.

DrKoresh DrKoresh 4:28 pm 19 Jul 13

Leasing cars is a niche industry providing a non-essential service. I don’t see the tragedy here, so a few dozen people have to find new jobs, BFD. It sucks for them, but now they can go get jobs that actually benefit the community.

chewy14 chewy14 4:05 pm 19 Jul 13

Jim Jones said :

Postalgeek said :

Pfff, those fking Reasonably-OK wankers are fking leeches, sucking off us Mildly-OK Aussie taxpayers.

Odd how no-one ever uses the phrase ‘class war’ when talking about cuts to the genuine poor: unemployment benefits, pensions, and so on.

Talk about cutting middle-class welfare and its ‘CLASS WAR CLASS WAR CLASS WAR’. Or even hint at raising the tax level for the wealthy and the shrill shrieks of ‘CLASS WAR’ will echo throughout the media (well … News Ltd, anyway).

From this I can only assume that ‘class war’ is when the benefits disproportionately flowing to the powerful and wealthy are under threat.

Apparently, cutting the rate of welfare of single mothers is okay because they really need to feel the discipline of the market rather than enjoy the support of the taxpayer, but it is ‘class war’ to wonder why tax concessions costing billions flow to high-income earners.

OK the ‘class warfare’ schtick is bogus and there’s myriad tax concessions, loopholes and benefits that should be scrapped but even you must realise there’s a difference between taking more revenue off productive citizens vs cutting benefits to non productive citizens.

thebrownstreak69 thebrownstreak69 3:36 pm 19 Jul 13

DEY TERK ER BENNERFERTS!

Jim Jones Jim Jones 2:25 pm 19 Jul 13

Postalgeek said :

Pfff, those fking Reasonably-OK wankers are fking leeches, sucking off us Mildly-OK Aussie taxpayers.

Odd how no-one ever uses the phrase ‘class war’ when talking about cuts to the genuine poor: unemployment benefits, pensions, and so on.

Talk about cutting middle-class welfare and its ‘CLASS WAR CLASS WAR CLASS WAR’. Or even hint at raising the tax level for the wealthy and the shrill shrieks of ‘CLASS WAR’ will echo throughout the media (well … News Ltd, anyway).

From this I can only assume that ‘class war’ is when the benefits disproportionately flowing to the powerful and wealthy are under threat.

Apparently, cutting the rate of welfare of single mothers is okay because they really need to feel the discipline of the market rather than enjoy the support of the taxpayer, but it is ‘class war’ to wonder why tax concessions costing billions flow to high-income earners.

Jim Jones Jim Jones 2:18 pm 19 Jul 13

bigred said :

Jim Jones just does not get it. If the Government wants more revenue it should just raise the rate, as opposed to scheming against various groups without considering consequences and perverse behaviour. It is called being transparent.

So … you don’t understand what ‘class war’ means and you want your tax rort (which you don’t appear to understand either) to continue and you’re absolutely livid and the gummint is SCHEMING and PERVERSE.

Got it.

Next caller please.

Postalgeek Postalgeek 2:14 pm 19 Jul 13

Pfff, those fking Reasonably-OK wankers are fking leeches, sucking off us Mildly-OK Aussie taxpayers.

bigred bigred 1:25 pm 19 Jul 13

Jim Jones just does not get it. If the Government wants more revenue it should just raise the rate, as opposed to scheming against various groups without considering consequences and perverse behaviour. It is called being transparent.

Jim Jones Jim Jones 12:53 pm 19 Jul 13

bigred said :

Yes Jim Jones, class war is what it is. Entirely declared on those who are doing reasonably ok. The cumulative impact is well into the thousands now.

Lol. I was unaware that ‘doing reasonably okay’ was a class.

Presumably getting rid of the baby bonus is also an instance of ‘class war’.

Heaven forbid that anyone should remove all this middle-class welfare – that would be completely ‘un-Australian’ wouldn’t it.

bigred bigred 11:59 am 19 Jul 13

Yes Jim Jones, class war is what it is. Entirely declared on those who are doing reasonably ok. The cumulative impact is well into the thousands now.

Masquara Masquara 11:59 am 19 Jul 13

Perhaps with some consultation and a phase-out, a couple of hundred sudden job losses in the car lease industry could have been made not quite so sudden …

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