On Tuesday, 10 May 2011, the Treasurer announced as part of the Federal Budget, changes to the calculation of fringe benefits tax ("FBT") for car fringe benefits.
The Government will replace the current 'sliding scale' with a single flat rate of 20 per cent that applies regardless of the distance travelled. The flat rate will be introduced progressively over a 4 year period in accordance with the following table:
| Distance travelled during the FBT year (1 April -- 31 March) | Statutory rate (multiplied by the cost of the car to determine a person's car fringe benefit) | |||||||||
| Existing contracts | New contracts entered into after 7:30pm (AEST) on 10 May 2011 | |||||||||
| From 10 May 2011 | From 1 April 2012 | From 1 April 2013 | From 1 April 2014 | |||||||
| 0 -- 15,000 km | 0.26 | 0.20 | 0.20 | 0.20 | 0.20 | |||||
| 15,000 -- 25,000 km | 0.20 | 0.20 | 0.20 | 0.20 | 0.20 | |||||
| 25,000 -- 40,000 km | 0.11 | 0.14 | 0.17 | 0.20 | 0.20 | |||||
| More than 40,000 km | 0.07 | 0.10 | 0.13 | 0.17 | 0.20 | |||||
The effect of the changes will be as follows:
- Favourable for drivers travelling less than 15,000kms per year.
- No change for drivers travelling between 15,000 and 25,000 kilometres per year.
- Unfavourable for drivers travelling more than 25,000 kilometres per year.
It is expected these changes will apply to new contracts entered into after 7.30pm (AEST) on 10 May 2011, although this remains to be determined as the Government has not yet released the law.
The change only applies to Employers using the "Statutory Formula" method to calculate FBT. There will be no change where an employer uses the "Operating Cost" method to calculate FBT.
Custom Fleet is reviewing these changes and the effects that they will have on our customers. We are also liaising with Government to get more of the detail. We will continue to provide updates as we work through the details.
To read the press release from the Treasury Department click here.
If you have any questions please contact your Sales & Customer Service Consultant or for Novated Enquiries you can call our Novated Heldesk on 1800 811 922.
Melanie Jamieson