FBT changes hit Ford

[jpd80]

Originally Posted by Elks

I was talking to a friend in the finance and leasing business, and this has decimated them. And whilst this has not passed as law as yet they are instructed by the ATO to act as it has or will. That's despite the likelihood of the current Govt being tipped out at the next election and Opposition saying they will repeal this. Although for a reason beyond me he has some chance of winning. WTF.

Tax law is different, changes can be enacted on the day they're announced so as to prevent people shifting finances to avoid penalties.

The hard part is the auto and finance industries face 3 to 6 months of reduced sales and massive losses. In some of the less profitable franchises that could send them to the wall.

This is hitting people who cannot justify business usage via a log book for 12 weeks that covers the next five years of activity.
Those who actually exceed the staturory 80% business utilisation will gladly take up log books,
the other side of this is that resilient fleet users will go log book just to stick it to the government in terms of
increased work in auditing for the tax department which is after all why novated leases came into existence.

Remember company cars used to be completely tax exempt. The FBT changed that so there is a contribution buy the company/employee. Yes it's subsided but there is still a deduction. Also don't forget the most common FBT rate used under the statutory method recently changed from 11 to 20%. So there is already an increased contribution to the tax base by this section of the community in the last two years.

Company cars were never exempt form FBT, the only thing that was ever relaxed ws the need for substantiation of actual business usage. I recall 20 years ago that managers with Falcons back then had to keep log books for 12 weeks as a way of identifying actual business usage. Sliding scales were adopted on vehicles that do increasing amounts of mileage but what the tax department discovered was that people were doing extra private klms to get the 11% FBT without substantiation.

Yes people should pay there taxes as a member of society. But changing a rule that has been in place for 30 years without consultation, without notice, without even an introductory phase in period, to cover a hole in the budget created by an unrelated polical decision is simply rectioanary and incompetent.

I wonder in K Dudd pays FBT on his company supplied Jet?

If anything, the tax department has been tardy in closing what has been widespread fraud..
The reason we're seeing this is because of the increased detection of fraudulent or overstated business usage.
Remembering that the FBT "Year" ends before financial year.

The annoying thing for me is that all the people who have brought this on business vehicles will now exit the scene
and leave legitimate business users back at square one with the burden of substantiation, thank you very much

[GASWAGON]

I'm glad I don't get sucked into all these tax evading schemes and crap.... I just drive my two old EFs on gas that are worth about 4k each and maintain them myself for very little cost.

[The Yeti]

Originally Posted by 2011G6E

Seeing as how only something like two of the top selling cars in Australia are "Australian built", that would be an extremely foolish thing to do. All those nasty horrible imports have to serviced here by Australians, sold here by Australian sales people, have tyres fitted by Australian workers, etc, etc...

That's exactly my point,

While I would like to see somthing other than hand outs help the Australian Car industry, you can't simply ignore the benefits to the economy of people buying new cars built any where, as you said the sales and service centers for these are in Australia and often Austrailan companys, they use tyres require after market accesories, they are fincanced through local insatutions

All this and more helps the Australian economy

[rods falcon]

Originally Posted by jpd80

Company cars were never exempt form FBT, the only thing that was ever relaxed ws the need for substantiation of actual business usage. I recall 20 years ago that managers with Falcons back then had to keep log books for 12 weeks as a way of identifying actual business usage. Sliding scales were adopted on vehicles that do increasing amounts of mileage but what the tax department discovered was that people were doing extra private klms to get the 11% FBT without substantiation.

I think the point here was going back a little further, pre 1986 when FBT did not exist, and company cars were claimed by employers on the basis that they were an employment related expense.

Anyway, enough of the history lesson, I think that the lack of consultation and transition time is the problem here as the practice has been accepted as legitimate for over 30 years.

[jpd80]

If you wnt to save heaps of money on a near new car , get one that's ex lease 2 year old 40,000 kms,
the money you save will put you miles in front compared to a novated lease.

[GASWAGON]

Originally Posted by jpd80

If you wnt to save heaps of money on a near new car , get one that's ex lease 2 year old 40,000 kms,
the money you save will put you miles in front compared to a novated lease.

Excatly! Or an ex demo..

[jpd80]

Originally Posted by rods falcon

I think the point here was going back a little further, pre 1986 when FBT did not exist, and company cars were claimed by employers on the basis that they were an employment related expense.

Anyway, enough of the history lesson, I think that the lack of consultation and transition time is the problem here as the practice has been accepted as legitimate for over 30 years.

Having experienced that first hand, a lot of company perks were given to attract employees and although seen as non cash,
things like cars and rental assistance in areas were all seen as FBT because too many people were trying to get around the system.

One person can fraud the tav department $10 million and not trigger a response
but if one million fraud the tax dept for $1,000, they respond..

[2011G6E]

Originally Posted by jpd80

If you wnt to save heaps of money on a near new car , get one that's ex lease 2 year old 40,000 kms,
the money you save will put you miles in front compared to a novated lease.

My god yes...you should see some of the cars for sale out here around Blackwater out to Emerald, at prices that have you honestly thinking "Nahh...that's a mistake...gotta be...". That isn't only cheap hatchbacks...it's things like SS's and XR6's and FPV's that are coming off lease and the owner needs to pay the residual, usually in a hurry.

JPD80 mentioned "rental assistance"...watch the bush deserted in droves and workers simply shift elsewhere if they ever tried to class cheap house rental (cheap rental full stop) as a "Fringe Benefit" and take it off workers. There's one reason and one reason only we moved way out here for the railway: that's a house for $130 a fortnight. The guys in the railway quarters...single men and the women in houses around town...get it for about thirty or forty bucks a fortnight, with power thrown in (we have to pay power). When offered depots to work at, I turned down some where I would love to have gone...Bowen, Sarina, etc...because they didn't offer any cheap company housing. There was no way I was paying five or six hundred bucks a week in rent for a normal rental house.
If they did away with it for us railway guys for example...got rid of the houses and the quarters, said "find a private rental, there's plenty vacant in Blackwater", I'd honestly chuck it in here and take a forty grand pay cut and go driving freight trains down the coast. It would be the same with the guys in the quarters whose families live elsewhere...they'd chuck it in and go back home. They'd be flat out attracting anyone out here to work.

It's the same at all the mines...some give extremely attractive rental deals for houses, as well as very cheap donga accommodation for drive in drive out or FIFO guys.
Changing those rules as they have done with the lease cars would, literally, kill the industry...hardly anyone would come out here to work and live.

Don't give them stupid ideas...they have a habit of becoming policy...

[CyberWasp]

If the government were really concerned with cost cutting the 1st thing to go should be their over inflated superannuation. It should be the same as it is for everyone else.
The saddest thing is we have to keep paying these fools for the rest of their lives after they stuff things up and are kicked out.

[geehaa]

Originally Posted by adrianb

This is where I think this was a mistake by Rudd - they've shut down a significant indirect stimulus for an industry that really needs it (absolutely, it came as a cost) and will, in all likelihood, not make nearly the revenue gain they think they'll make not to mention the direct and indirect impacts this decision has made on employment and industry.

Originally Posted by The Yeti

you can't simply ignore the benefits to the economy of people buying new cars built any where, as you said the sales and service centers for these are in Australia and often Austrailan companys, they use tyres require after market accesories, they are fincanced through local insatutions

All this and more helps the Australian economy

These are the relevant bits for me. There are certain things we expect Government to do and one of them is provide an environment where industry can work. People needs jobs, services need to be supplied so those people can spend the money they earn. What is on one level arguably a 'rort' is on another a subsidy for the car industry.

Although I agree any level of "rort" should be shut down, I think it was Kerry Packer who said words to the effect of why pay more tax than we have to - it's not spent that well. If there are loop holes (and they will always exist) they will be exploited.

[XWGT]

McMillan Shakespear share price down 46%......$484 million in market capitalisation wiped....

Enormous impact.

[vanman_75]

Originally Posted by EF_6

I'm glad I don't get sucked into all these tax evading schemes and crap.... I just drive my two old EFs on gas that are worth about 4k each and maintain them myself for very little cost.

Lol , I drive 50 thousand k from my house of residence a year( to my place of work ) ..before I use my car for personal trips ..I also have a falcon personal for duties of getting me from my work residence to the job ( an extra 25 thousand a year ) my vehicle costs with lease car " perk " as ya all call it just helps me soak up all those ks , is that personal use yep 70 thou a year of personal use to get to work , yes I get paid well but these are not perks for most people but only a means to make my job " worth doing " how many ks a year do you do ? Car maintenance costs ? How long will that ef hold together on the beef road ?

I pay huge tax into our economy way past the normal bloke but I'm expected to accept being call a fraudster ? This little exercise will add about 200 a week to my already high costs of getting to " work " I have multiple regos ,maintenance bills , insurance ..I am not a fraudster..out of my net I paid 350 a week and my gross 300 a week so 650 a week to run my first work car ...I still need a reliable k burner so will still buy the ranger I ordered , sorry if I come across abrupt but you will find most leases are in this situation with all the new travel to get to work that they never did years ago

[jpd80]

Originally Posted by XWGT

McMillan Shakespear share price down 46%......$484 million in market capitalisation wiped....

Enormous impact.

Yep and here's why,

James Lennon, of Ord Minnett, estimated shares would steady between $8 and $9.
He said this was based on half the company's novated leases being for private use,
which would equate to a 30 to 40 per cent hit to earnings.

Read more: http://www.smh.com.au/business/mcmil...#ixzz2a7fkQH1Z

I feel for the people now caught up in this, they just don't realise how venomous the tax department can be.
I've been been through two audits in the past and fortunately each time I had full records for substantiation.

My deepest concern here is not for the leasing companies, it's for all the poor people now caught up in this.
The tax department finds things wrong, they tend to go back through previous tax returns......

[vanman_75]

And the flip side for normal folk , just got off the phone as I was letting my dealer know I'm still going through with purchase and looks like the price will go up a fair wack as the volumes to companies drove prices down ...dam :/

[Smoke Pursuit]

Originally Posted by jpd80

If you wnt to save heaps of money on a near new car , get one that's ex lease 2 year old 40,000 kms,
the money you save will put you miles in front compared to a novated lease.

Ex Lease... Wont be many out there soon if people stop "LEASING" will there!

[Outbackjack]

The price of second hand cars will almost certaintly rise due to this. Novated leasing accounted for a huge percentage of new cars on the road... If most of those dry up..?.. Well, I hope everyone is happy to shell out more $$ for their next second hand car...

[jimmyxr6t04]

My novated lease saved me about 5k tax this year... My investment property saved me another 11k... So, instead of paying 33k tax this year, i paid 17k...

Now that leasing isn't an option, i'll more than likely put that extra $700 per fortnight towards another property or two... So, whilst the government stopped me saving $5000 in tax, i will certainly save more over the coming financial years!

Novated leasing was great for me... i got to drive a 50k+ car and have all running costs accounted for. Sure i lost a decent chunk of money, but for me it was worth it.

Now i'll invest in more property, have the wife package our mortgage instead of a new car and i'll simply pay cash my next car, or perhaps a low interest loan if dealers can't move cars anymore...

[Outbackjack]

Originally Posted by jimmyxr6t04

My novated lease saved me about 5k tax this year... My investment property saved me another 11k... So, instead of paying 33k tax this year, i paid 17k...

Now that leasing isn't an option, i'll more than likely put that extra $700 per fortnight towards another property or two... So, whilst the government stopped me saving $5000 in tax, i will certainly save more over the coming financial years!

Novated leasing was great for me... i got to drive a 50k+ car and have all running costs accounted for. Sure i lost a decent chunk of money, but for me it was worth it.

Now i'll invest in more property, have the wife package our mortgage instead of a new car and i'll simply pay cash my next car, or perhaps a low interest loan if dealers can't move cars anymore...

What you are saying makes perfect sense. Be carefull on the property purchasing. When you buy dont go interest only finance. All my properties are/were principal and interest.

I have been told by a reliable source that the Government will move on interest only properties as there is only intent to depreciate and negative gear to reduce tax. That is what I would consider a rort. But if you are chipping away at the principal it shows that you intend to eventually move into positive territory and pay your legitimate tax liability. Paying tax on a property is still much less than PAYG earnings. It also is a very good choice for retirement income.

[mcnews]

I would like to see negative gearing walloped too.

[flappist]

Originally Posted by BroadyFord

How about anything that rolls of the lines at Elizabeth, Broady or Altona?

Simple.

Ah I see.

So all the others are excluded?

And it will have the advantage that it will self terminate in 2016 before the next elextion......

[jimmyxr6t04]

Originally Posted by mcnews

I would like to see negative gearing walloped too.

Why? Then the masses would be force to buy their own house... plenty wouldn't be able to afford it... Investing in property wouldn't be worth the risk without negative gearing. Who would purchase houses for people to rent, not everyone wants to buy?

Originally Posted by Outbackjack

What you are saying makes perfect sense. Be carefull on the property purchasing. When you buy dont go interest only finance. All my properties are/were principal and interest.

I have been told by a reliable source that the Government will move on interest only properties as there is only intent to depreciate and negative gear to reduce tax. That is what I would consider a rort. But if you are chipping away at the principal it shows that you intend to eventually move into positive territory and pay your legitimate tax liability. Paying tax on a property is still much less than PAYG earnings. It also is a very good choice for retirement income.

Yeah, our current investment is interest only, but that's only until we recover some of our costs etc. As of next year it'll be principal and interest. I'd like to own it one day!

[Outbackjack]

Originally Posted by mcnews

I would like to see negative gearing walloped too.

I agree that there is some scope to make some adjustments. But dont hit the people that are legitimately buying to eventually earn an income. These people provide a service that the government would have to provide if they were to invest elsewhere. The Guv tried cutting back on negative gearing back in the late eighties or early nineties (cant remember exactly when) it soon became apparent that it was going to cost the Guvment (ie you and me) a heap more to provide housing and all the maintenance that goes with it to fill the hole left by investors that bailed out of the property market.

[jpd80]

Originally Posted by Outbackjack

What you are saying makes perfect sense. Be carefull on the property purchasing. When you buy dont go interest only finance. All my properties are/were principal and interest.

I have been told by a reliable source that the Government will move on interest only properties as there is only intent to depreciate and negative gear to reduce tax. That is what I would consider a rort. But if you are chipping away at the principal it shows that you intend to eventually move into positive territory and pay your legitimate tax liability. Paying tax on a property is still much less than PAYG earnings. It also is a very good choice for retirement income.

Also be careful that the tax department doesn't view your investment portfolio as a tax avoidance measure,
there are provisions under the act to penalise if they consider the primary purpose was to avoid tax..

[Pepscobra]

Originally Posted by mcnews

I would like to see negative gearing walloped too.

Thats a dangerous comment from any 'have not' who thinks its ok to penalize the 'haves' who have worked hard and sacrificed to try to get ahead.
Negative gearing is to incentivize investment and ease risk.
Yes I am a 'greedy' landlord that comment was directed at.

If you think this fallout from FBT changes is big, imagine what would happen if negative gearing laws were changed; much of our current domestic economic structure is based around it.

[2011G6E]

Originally Posted by mcnews

I would like to see peoples rents walloped too.

...just fixed that for ya...

Landlords aren't in it as a charity...increase the burden on them, and they'll do one of two things: decide it's too hard and sell up and get out of the rental game...or increase rents to cover costs. Neither is good for renters, which make up a substantial percentage of people nowadays.


I think Labor is basically trying to drive yet another social wedge into society...making out that those evil people taking advantage of lease vehicles are all rich and well off and fat cats who are diddling the tax department while sitting back sipping champagne and smoking a fat cigar.
They're not...they're ordinary people, ordinary down to earth workers In a lot of cases people who would never have bought a brand new car at all if not for the benefits of leasing. That's going to be shown in the slump in new car sales and job losses.

Labor has a history of trying to divide and conquer, appealing to the people who are happy to sit on their bums and do nothing and point the finger for societies ills at the people who are out working hard and earning a living. It's an ancient tactic of theirs.

[manny.miner]

Originally Posted by jpd80

Also be careful that the tax department doesn't view your investment portfolio as a tax avoidance measure,
there are provisions under the act to penalise if they consider the primary purpose was to avoid tax..

I think the term is tax minimization. I'm sensing this topic is turning into a case of tall poppy syndrome. I think people don't understand that negative gearing is just a means of deferring your tax liability because once you offload the property you are slugged with capital gains tax. This can also be minimized, legally, if you know how the system works.

I've paid 50k in tax financial year just gone, so any way I can reduce my tax to benefit me I will just so I don't have to support oxygen-thieving dole bludgers.

I didn't quite the above post to single out anybody in particular, it's just my view.

Manny.

Sent from my GT-I9505 using Tapatalk 2

[GT0132]

Seems that Rudd is trying to push ahead with some significant changes without having any rergard to the implications. Act now think later seems to be the order of the day.

On the issue of the survival, and likely demise, of salary packaging and some leasing companies, I struggle to understand why any business model would have as its key driver the existence of one simple tax concession with its survival based on the hope that no incumbent government ever abolishes it.

[gtfpv]

Originally Posted by mr smith

A good mate works for Ford. I was having a chat with him last night and he said they received the news that the FBT changes are hitting hard with lots of cancelled orders and that all Ford workers who have a lease car have had a freeze on new vehicles. I'm seeing the 2016 closure looking more like 2014.

Regardless if you agree or not with the motives behind the changes this has to be another example of gross mismanagement of government.

what ?? FBT changes hit FORD ? NO !!!! YOUR KIDDING RIGHT ?

[2011G6E]

Ah, the old tall poppy syndrome.

I remember the late Kerry Packer being exposed as one tax year having had a personal income of something up in the tens of millions, yet only paying around $14,000 income tax. His comment to reporters? "Anyone who doesn't use a clever accountant to minimise his tax is a bloody idiot!".

...because, you know, everyone has a full time accountant on staff to keep an eye on his books and seek out loopholes...


Equating the average worker who has taken an opportunity to save a little (sometimes a very little) tax to be able to get into a brand new car with some multi-millionaire diddling the Australian tax service is just plain wrong...but it's what Ruddles is quite obviously trying to do...

[mr smith]

Originally Posted by Dr Smith

So people can't be bothered filling in a log book...

The problem is not the issue with filling out a log book, its about a change in tax policy hat has been massively mismanaged.

I am sure the people who think this is a good thing have absolutely no exposure to the companies and individuals effected by this.