AFLA Notice to members: Fringe Benefits Tax on cars

Executive Summary

Without consultation, the Government today announced that the statutory formula method for salary-sacrificed and employer-provided cars will be removed for new contracts entered into after announcement, with effect from 1 April 2014. Existing contracts that are not varied will continue to have access to the existing statutory rate throughout the contract. The operating cost method is not affected. The accompanying Fact Sheet provided by the Treasurer’s Office provides further details. We have been invited by the Treasurer’s Office to consult on the implementation of this measure, but subject to Members’ views our immediate approach is to request the Government to review this decision. It is contrary to the findings of the Senate Economics References Committee which recommended in February of this year that these arrangements should be reviewed in 2015. This measure will also impact significantly on tool-of-trade vehicles. We will co-ordinate our response in consultation with other impacted industry sectors. To assist in this process, Members are requested to provide your perspective on the immediate and longer-term undesirable/unintended consequences of this measure. Feedback is requested by this Friday 19 July.

John Bills