Blog & Updates

In-depth analysis of the Federal Budget

Author: Barry Scott / Published Date: 16 May 2011

Categories: Novated Leasing, Consultancy, The Autopian

The Autopian

Leading edge commentary on the vehicle benefits industryl Budget edition
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In this special edition of The Autopian we review the recent FBT changes in the budget.

First of all we analyse the immediate affects of these changes on businesses and employees, before drilling down into the specifics of what finance and HR departments need to know.

Then we take a long term look at the future landscape of vehicle salary packaging, consider the origins of the changes, and examine a few real life examples – how much of a financial difference will it actually make?

  • How the Federal Budget affects businesses
  • What HR needs to know
  • What finance needs to know
  • Novated lease examples
  • FBT changes direct from Bob Brown?
  • Future repercussions for corporate Australia
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2011 - 2012 Federal Budget and how it will affect Australian businesses and employees

Author: Jeffrey Morton / Published Date: 11 May 2011

Categories: Novated Leasing, Consultancy

Last night’s budget introduced a change to fringe benefits tax inline with one of the recommendations from the recent Henry Tax Review.

The statutory method of calculating the fringe benefit value of a salary packaged car has changed. Instead of four tiered tax brackets all dependant upon annual kilometres driven, there will eventually be a flat 20% rate across the board – regardless of distance travelled.

In conjunction with AonHewitt we'll be hosting a free breakfast briefing on the immediate, and the long-term implications for Australian businesses.

How it will affect employees with novated leases

For all existing novated leases (those entered into before 7:30pm on 10th May 2011) there is no change at all. The lease will run its course as normal.

For all new novated leases entered into after 7:30pm on 10th May 2011, the changes are being phased in over a four year period as below.

                                                                     New novated leases
Total kilometres travelled
per year
Existing novated leases
From
10
May
2011
From 1 April 2012
From 1 April 2013
From 1 April 2014

< 15,000

26%

20%

20%

20%

20%

15,000 - 24,999

20%

20%

20%

20%

20%

25,000 - 39,999

11%

14%

17%

20%

20%

40,000 +

7%

10%

13%

17%

20%


The tiered system had been criticised for encouraging individuals to drive greater distances than they ordinarily would in order to achieve greater tax benefits.

In an increasingly environmentally conscious world, this must have been an increasingly difficult position to defend.

If you currently have or are considering entering into a novated lease agreement, click here for more details.

How it will affect businesses that currently run car salary packaging programs

If organisations are prepared to capitalise on the change in regulations, it presents an extremely positive change for the following reasons:

  • The implementation of a flat rate will curb environmentally irresponsible driving  behaviours ‘fuelled’ by aging tax legislation.
  • This allows organisations to increase their corporate social responsibility.
  • More employees will be able to achieve tax breaks on personal vehicles than at any other time in the history of Australian salary packaging, and there will be greater equality of the level of benefit regardless of kms travelled.
  • This enables organisations to reduce their payroll tax, increase retention levels, and reduce their workers’ compensation premiums - all direct results of an increasing number of novated leases in a business.
  • Much of the administration and perceived risk in managing novated leases as we know it will disappear.
  • This will make the whole process easier, and quicker, allowing administration staff to spend more time on other profitable tasks.


The removal of the tiered tax brackets also affects company cars, so it may be a prudent time to assess the organisations company car policy.

Want to know more?

We’ll be releasing further commentary on the subject in a special edition of 'The Autopian' - our in-depth analysis of news & developments in the vehicle benefits industry.

If you’d like to sign up to receive this information please call 02 8307 5555 and ask for Greg or Tony.

In conjunction with AonHewitt, we’ll also be hosting a free breakfast seminar on Wednesday 25th May 2011 which will provide you with:

  • analysis of the immediate changes,
  • industry expertise and insights into the future landscape,
  • strategies enabling you to capitalise on the opportunities, and
  • a road map of the pitfalls presented by the change in legislation.
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FBT announcement imminent?

Author: Jeffrey Morton / Published Date: 5 May 2011

Categories: Novated Leasing, Consultancy

Amongst others, the Greens Leader Bob Brown is pushing for a cut in fringe benefits tax (FBT) concessions on company and salary packaged cars in the May budget.

Vehicle fringe benefits are currently calculated, when using the statutory method, on a sliding scale. The applicable tax rates reduce the more an individual drives. By abolishing the tiered brackets and applying a flat rate of 20% regardless of distance travelled, Treasury estimates it will save $1 billion over the next 4 years if implemented. The flattening of the rates is as per the recommendation of the recent Henry Tax Review.

"If the government is serious about reducing the economy's reliance on fossil fuels, reducing tax breaks that reward people for driving longer distances in company cars should be included in next month's budget,"Senator Brown, April 2011

But apart from being more friendly to the environment, what will this actually mean for employers who allow their employees to salary package cars with novated leases, and their employees who take advantage of the program? As discussed in the Winter 2010 edition of ‘The Autopian’, we believe this would be a very positive change.

  • Employees who drive less than 15,000kms pa will be taxed at 20% rather than 26%, delivering more savings than this band of drivers has ever been able to achieve previously.
  • Employees driving between 15,000kms and 24,999kms pa will not be impacted as their rate will remain the same.
  • Employees that drive more than 25,000kms pa will experience a reduction in the size of the tax benefit they achieve but despite the reduction, the benefits remain generous, and novated leasing for this market segment will still be an attractive option, especially for those with predominantly private vehicle usage.

If the cut in FBT concessions is implemented, more employees with more driving profiles will be able to benefit from salary packaging a car.

In summary, these recommendations would make wide-scale implementation of novated leasing for all levels of employees more attractive than ever before. With the risk of missing kilometre targets no longer an issue, more employees will novate their cars, and the businesses that promote the benefit will become more profitable.

We'll be responding to the budget, and any effects it may have on the vehicle salary packaging industry in a special edition of 'The Autopian' - our in-depth analysis of news & developments in the vehicle benefits industry.

If you'd like to receive our full commentary on the subject, sign up to receive 'The Autopian' by calling 02 8307 5555 and asking for Greg or Linda.

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How to win the fight for talent

Author: Barry Scott / Published Date: 4 May 2011

Categories: The Autopian, Novated Leasing

The Autopian

Leading edge commentary on the vehicle benefits industry l Autumn 2011 edition
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In this edition we focus in on an issue that is very much front of mind for HR professionals at the moment - how to win the fight for talent.

We also address the increasing political pressure to adopt one of the Henry Tax Review recommendations on FBT, we talk to Alla Keogh - HR Director at iSelect, and introduce you to Jamie Bagala - Novated Leasing Consultant at Autopia.

Stay tuned for a special edition of The Autopian in response to the budget announcement next week.

  • How will you win the fight for talent?
  • FBT announcement imminent?
  • Client profile - iSelect
  • Inside Autopia with Jamie Bagala
  • Petrol price trends
  • Driver survey results
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Le Mans & Bilby Cup wins for Ethan

Author: Barry Scott / Published Date: 3 May 2011

Categories: Team Updates

Ethan should have bought a lottery ticket last week, as he lucked out and won two trophies – The Le Mans and the Bilby Cup.

Actually that’s not fair, hard work was responsible for the Le Mans win really - having put in one of his best performances ever in March, we’re all in awe of his efforts.

The Bilby Cup is a golfing tournament held in Ulladulla every year, and there might just have been a little bit of luck involved in that one..

Well done Ethan, here’s to three trophies next month!

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