2011-2012 Budget update

For all new novated leases entered into after 7:30pm on 10th May 2011, there have been changes to the statutory rates used to calculate fringe benefits as a result of the 2011-2012 Federal Budget.

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.

Q. How have the statutory rates changed?

For new novated leases entered into after 7:30pm on 10th May 2011
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 travel.

Q. When will the changes take effect?

For new novated leases entered into after 7:30pm on 10th May 2011
The flat 20% FBT rate across the board is being phased in over a four year period.

  • For the less than 15,000 kilometres bracket, the changes take effect immediately.
  • For the 15,000kms to 24,999 kilometre bracket, there will be no change.
  • For the two brackets driving over 25,000kms, the changes will be phased in as detailed 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%

 


Q. How will it affect me financially?

For new novated leases entered into after 7:30pm on 10th May 2011
Depending on which kilometre bracket you currently fall into, when you take out a new novated lease, you will experience the following difference in tax benefit.

  • If you currently drive less than 15,000kms pa, your next novated lease will be taxed at 20% rather than 26%, and you’ll receive more tax savings than ever before. Click here for a worked example.
  • If you currently drive between 15,000kms and 24,999kms pa your next novated lease will be taxed at exactly the same rate, no change in tax savings.
  • If you currently drive between 25,000kms and 39,999 kms pa, your next novated lease will be taxed at 20% as opposed to 11%, and you will experience a reduction in the size of your tax benefit. It does however, remain the most tax effective means of owning a car. Click here for a worked example.
  • If you currently drive over 40,000kms pa your next novated lease will be taxed 20% as opposed to 7%, and you’ll experience a reduction in your tax savings, and again, it still remains the most tax effective form of car ownerhsip. Click here for a worked example.

Despite any reduction in tax benefit, a novated lease remains the most tax effective way of owning and running a car.

Q. How much money is it going to cost?

It’s not going to cost you any money at all.

Q. The FBT year just ended, will I have to pay more tax for last year?

No, none of the tax changes are being applied retrospectively.


Q. How many kilometres do I have to do now?

For new novated leases entered into after 7:30pm on 10th May 2011
Once the full 20% change comes into affect, you’ll be able to do as many, or as little as you like. Kilometres will be irrelevant. Come FBT year end there will be no prompts from Autopia, or your employer, asking you to drive half way across the country at the weekend.

You can just continue on your regular driving patterns and our budgets will be set accordingly.

Q. If my car is set up on the Operating Cost (logbook method) am I affected by these changes?

The changes in statutory rates do not apply to the Operating Cost (logbook method) at all. Novated leases operating on this method will be exactly the same before, and after the budget.

Q. If I'm in the over 25,000km pa category, are there any options available in order to avoid this future reduction in tax savings?

Yes there are, for example if you have a reasonable amount of business use for your vehicle, the logbook method could prove beneficial. Individual circumstances all vary, and your Novated Leasing Consultant will discuss alternative strategies with you during your consultation for your next novated lease.

Q. I have had another novated lease in the past, will this have any affect on that?

No, the changes only apply to new novated leases entered into after 7:30pm on 10th May 2011.


Q. What do I need to do now?

If you are about to take out a novated lease for the first time, or your existing lease term ends soon, call Autopia and ask to discuss the strategies available to ensure the greatest amount of tax benefits under the new legislative conditions.

Thanks to the FBT reforms, salary packaging a car has now become easier, and more accessible for all, and it's still the most tax effective way to own a car.

Testimonials

Autopia staff have excellent vehicle knowledge, and are prepared to provide advi ...

Christopher Wallace,
View Driver Testimonials ...
To Top