Company car crackdown.   :)


PEOPLE who drive company cars for private use face a crackdown in next Tuesday's federal budget, with changes set to save the government about $950 million over four years.   :)

Fringe benefit rules that currently reward people for running up extra kilometres on vehicles financed by salary sacrifice will be toughened. In future there will be no incentive to maximise the distance driven.

The change - which was recommended in the Henry tax review - could be sold by the government as one to conserve fuel and save taxpayer dollars. :)  


The crackdown is a response to evidence that many people have been manipulating the system to achieve higher benefits.   :(  

At present, there are four levels of fringe benefits tax applied to cars bought on salary sacrifice, ranging from 26 per cent of the car's purchase price for those driving fewer than 15,000 kilometres a year, down to only 7 per cent tax when the kilometres exceed 40,000.

The figures show spikes at each threshold, suggesting people are deliberately exceeding them to save on tax.

Under the budget changes, the different tax rates will be replaced by a single 20 per cent fringe benefits tax rate, so that all taxpayers get the same level of concession regardless of their mileage.

The effect will be to increase the concession for people driving fewer than 15,000 kilometres a year, maintain the current concession for those travelling between 15,000 and 25,000, and cut it for over 25,000 a year.

Official figures show there are 570,000 cars operating under the statutory formula.

While fringe benefits tax is paid by the employer, it is usually recouped from the employee who receives the benefit. About half those affected by the budget change are likely to be worse off.

On another budget front, Prime Minister Julia Gillard yesterday received a mixed reception for her pilot measure to ensure teenage mothers are in education or training.

From January, teenagers in 10 trial communities, with a child six months or older, and who haven't finished school and are receiving the parenting payment will have to attend compulsory ''support and engagement'' interviews with Centrelink.

Announcing the scheme, Ms Gillard said there were 11,000 teenagers on parenting payments. More than half of them had been on welfare before becoming parents, and 80 per cent of them had not completed year 12. ''These teen parents are at risk of a lifetime of disadvantage if we don't try and make a difference for them. So are their children,'' she said.

Opposition Leader Tony Abbott said the proposal would not work unless matched with a serious effort to boost childcare.

Mission Australia chief executive Toby Hall said: ''Getting in early and making sure teenage mums are kept in touch with education and training to avoid entrenched welfare dependency in later life should be warmly welcomed.'' But he said it would be better if participation in the trials was voluntary.

Greens deputy leader Christine Milne said while it was good to have incentives to get young people back into education, it was not appropriate to tell a young person that they have to put their child in care at the age of one.

About time. This FBT lurk has been an outrage for the past 25 years, not to mention the salary packaging rorts that followed along the way.

But let's not forget imcrook, that it was YOUR Mr Keating who brought it in.

No not my Mr Keating.   Vote 1- Australian Greens.  The fair and sensible people.   :)

The peole who are legitimatly travelling the furthest are already the most disadvantaged.

Sure people do a few extra K's to get into the next group is this such a big deal, they work out on the contract about what they travel and in some cases struggle a bit to meet the target.

Lovely, Im currently in the 11 per cent bracket, and once again the ALP are screwing me.

So next year I cop a flood levy, on top of screwing me on the salary sacrifice arrangement that still has 15 months to run.

Great work ALP, just another kick in the guts in the average family trying to get a little ahead.

Cant wait for the carbon tax next.

If you're REALLY worried about tax $$$ being wasted, how about you focus on the lurks and perks of superfluous public servants, instead of picking on joe blow?

But you're not really worried about that are you, you're just bitter at others doing better than you are.

what about negative gearing tax concessions for property hoarders and speculators ?? When are they going to do something about that and level the playing field for first home buyers ??

Reports that Tuesday's federal budget will include a shake-up of the fringe benefit tax (FBT) rules for company cars is a $1 billion victory for common sense, the Australian Greens say.   :)

It's been reported that Labor will adopt a recommendation from the 2009 Henry tax review to reform FBT rules to discourage people from running up extra kilometres to get a tax break.

"FBT reform is so obviously a win for the environment and the budget that it has been expected in every federal budget for years," Greens deputy leader Christine Milne said in a statement.


"[But] we mustn't count any chickens unless and until we see it in black and white next week."

Treasury costings, undertaken at the request of the Greens, show almost $1 billion in revenue would be restored over the forward estimates if a flat rate FBT concession for company cars was introduced regardless of kilometres travelled.   ;)

"Overhauling the fringe benefits tax concession would be a $1 billion victory for common sense and a big first step in removing the perverse fossil fuel subsidies that see billions of taxpayers' dollars actually encouraging pollution," Senator Milne says.

The current system requires drivers of salary-sacrificed vehicles to drive a high number of kilometres annually to receive bigger tax breaks.

A flat tax of 20 per cent reportedly in the budget would discourage this practice.

It is also expected to save about $950 million over four years, Fairfax reports.

People driving more than 25,000 kilometres a year will be penalised financially unless they keep scrupulous log books and separate business and personal use.

Tax rates under the system now range from a benefit of 26 per cent of a vehicle's purchase price for people who clock up 15,000 kilometres and a tax benefit of 7 per cent for those who drive more than 40,000 kilometres.

well the last I heard the pollies cars were also COMPANY cars...

they are not chauffeur driven hire cars..


did they mention this in their budget?????

we own those cars not the pollies.they are employed by us..

and I am sick of the one rule for them and another rule for the rest of us