What is the Fringe Benefit Tax (FBT)?

Fringe benefits tax (FBT) is a tax employers pay on certain benefits they provide to their employees, including their employees’ family or other associates. The benefit may be in addition to, or part of, their salary or wages package.

If you are a director of a company or trust, benefits you receive may be subject to FBT.

Fringe benefits tax is separate to income tax and is calculated on the taxable value of the fringe benefits provided.

The FBT year runs from 1 April to 31 March.

Follow the links below for more information on:

Source: https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/ 

A new dawn for Novated Leasing and a brand new website

It’s not just a new website, nor is it the new series of video messages to clarify the facts and figures on Novated Leasing, it’s the notion of ‘Less is More’.

Last week LeasePLUS launched a new website to its customers. When rebuilding the new website the main goal was to make sure that any employees or employers who browse through it can obtain relevant information in the easiest possible way.

The new LeasePLUS website is created around its users’ needs, cutting down the superfluous content and giving importance to what really matters.

With this goal in mind we decided to give our website a complete makeover creating a fresh and modern look.

Less is More

The ‘Less is More’ philosophy is an approach to life that removes the unnecessary stress and worries of today’s world, leaving you with more time to fully live your life.

We use this approach to simplify the leasing process and remove the hassle of running and financing your car, leaving you with more time to do what you want.

Videos and digital media

Our first video is an introduction to the LeasePLUS philosophy ‘Less Is More’. It highlights our people-centric focus of removing the hassle and stress of running a vehicle or managing a fleet so that you have more time for yourself, either as an employee or an employer.

Subscribe to the LeasePLUS TV to view the upcoming digital content.

Friends with Benefits

Friends with benefits

Friends with benefits

If you thought you were already getting the most out of your Novated Lease, you were definitely right; but now we’ve decided to give you even more!

Share with your friends, relatives or work colleagues the secrets of Novated Leasing. If they call up, mention your name and take on a lease with us, you’ll get a $100 Coles & Myer Gift Card!

Don’t worry, we’ll always call back!

Volkswagen auction fallout – Leasing pause to hit VW Group as industry looks closely at residual values


VOLKSWAGEN dealers, finance and leasing companies, and VW Group brand owners, are bracing for more bad news as distressing indications start emerging about the likely impact the manufacturer’s diesel scandal will have on residual values in leases, floorplan financing costs on rising stock levels and a sudden buyer disinterest in the brand.

As the drama continues to unfold, the head of the Australia Salary Packaging Industry Association Leigh Penberthy has told GoAuto that his company LeasePlus has recommended its clients stop leasing Volkswagens until the likely effect on residuals can be calculated into new lease agreements.

Meanwhile, dealers have told GoAuto that Volkswagen clearance rates at VW dealer auctions in Australia have dropped dramatically with as many as half the cars offered for sales as dealer used car stock being passed in.

Details are sketchy and a spokesman for the big Australian auto auction group, Manheim, said that the company could not comment on dealer auctions as they were conducted privately between car importers and dealers of that brand and therefore the results were confidential.

Finance companies are also watching dealer vehicle financing closely as floorplan loans are backed by the value of the stock. If VW values drop substantially, finance companies will be asking dealers for more cover for their borrowings – especially on stock that has a current stop-sale order on it from Volkswagen Group Australia.

The problem is also exacerbated by the long pipeline between Australia and vehicles ordered from the factory, with shiploads of cars fitted with defeat devices already on the water and likely to further flood the market with cars that people are now indicating they may want to avoid – even once the fixed is made.

Australia’s biggest online car marketplace, Carsales, has reported that buyer interest in both VW petrol and diesel cars has crashed since the scandal broke although there are some signs of a partial recovery in the past few days.

Carsales charts show that interest in diesels fell from 650,000 views to 300,000 views in the wake of the scandal but are now running at 400,000 views. Petrol VW models were also hit, falling from 850,000 views to under 500,000 although petrol views are now back over 800,000.

Where the scandal is especially concerning is in the finance and leasing area.

Glass’s Information Services national sales and marketing manager Nick Adamidis said that if 50 per cent of Volkswagen cars were passed in at dealer-only auctions, it could indicate residual rates falling by up to 10 per cent.

“That’s a big number and it means a lot of money would be lost,” he said

Mr Adamidis warned that it could be a kneejerk reaction to Volkswagen’s current problems but he expected “some initial deterioration” in Australia in the order of 3-5 per cent.

But he said if lack of demand persisted for six months “a 10 per cent reduction in residual values would be possible”.

Residual values (before scandal/after scandal)

Volkswagen Passat Wagon 130TDI Highline
New Car Price $46,990
3 yr Residual (before) 46%
Value in 3 yrs (before) $21,612
3 yr Residual (after) 36%
Value in 3 yrs (after) $16,916
Loss $4696
Volkswagen Jetta 103TDI Highline
New Car Price $36,490
3 yr Residual (before) 43%
Value in 3 yrs (before) $15,691
3 yr Residual (after) 33%
Value in 3 yrs (after) $12,042
Loss $3649
Volkswagen Tiguan 130TDI
New Car Price $39,990
3 yr Residual (before) 53%
Value in 3 yrs (before) $21,195
3 yr Residual (after) 43%
Value in 3 ysr (after) $17,196
Loss $3999
Skoda Yeti 103TDI
New Car Price $34,390
3 yr Residual (before) 44%
Value in 3 yrs (before) $15,132
3 yr Residual (after) 34%
Value in 3 yrs (after) $11,693
Loss $3439

Mr Adamidis said that residual values for Volkswagen Group products – including Audi and Skoda – in Europe had dropped 2-3 per cent last month while rival brand residuals increased.

Mr Adamidis said if there was buyer backlash to Volkswagen’s emissions deception then it would show up in new-car inventory levels.

“Companies such as Volkswagen order six to 12 weeks in advance. If the sales decline and the inventory remains high, there will be discounting of the brand and that will immediately affect residual values,” he said.

Mr Adamidis said that because the Volkswagen issue involved deception “you may see Volkswagen buyers leave the brand over this”.

LeasePlus CEO Leigh Penberthy, who is also the chairman of the Australia Salary Packaging Industry Association, said that his company was telling new customers to look at vehicles from alternative manufacturers until the Volkswagen problem was solved.

He said the residual price of leased Volkswagens involved in the scandal were likely to take a heavy hit but said that at this stage the future values of new VW product like new SUVs, utes and commercial vehicles that are not caught up in the scandal are unknown.

He said that the new-car volumes and the reaction from bidders at auction houses would be the first telltale signs of the damage of the Volkswagen Group problem in Australia. “We will be talking to auction houses around Australia to gauge reaction to the Volkswagen problem and that will be used to base our future residual values,” he said.

He said it may take a couple of months to formulate the effect of the Volkswagen emission problem in setting leases.

Mr Penberthy said even his staff members were caught up with owning leased Volkswagens, Audis and Skodas.

“Anyone with those makes, diesel or not, who either own it or lease it, needs to ask: What happens to the price of the car when I sell it? What happens when the fix arrives – will it change the performance and/or economy of the vehicle and if so, should I be compensated? Will it impact on the residual?

“The answer to the last one, I believe, is ‘yes’.”

Below: Carsales traffic records show a dramatic drop in interest in Volkswagen models since the announcement of the diesel scandal. Even petrol models suffered a reversal. However there are positive signs of a recovery in the past few days.

Why Novated Leasing? – Not For Profit Organisations

Leigh Skelton is the Finance Manager of Ballarat and District Aboriginal Co-operative (BADAC),a Not For Profit Organisation delivering much needed health, social, welfare and community development programs to local Aboriginal people.

In their latest company newsletter, Leigh describes all the reasons why he loves his Novated Lease with Car Leasing Options.

Click here to read the excerpt.

If you are a Not For Profit Company and would like to know more about offering this service to your employees, contact us on 1300 69 30 77.

Federal Budget 2015 – Workers pushed into higher tax brackets

Hundreds of thousands of Australian workers will find themselves in higher tax brackets after [the] federal budget left tax brackets unchanged.

The failure to reset tax brackets will push the average full-time worker, earning $78,000 a year, into the second-highest tax bracket in 2015-16, with any earnings over $80,000 subject to a 37 per cent tax rate, 39 per cent including the Medicare levy. As a result, the average worker will be slugged an extra $1200 in tax a year, and the average income tax rate will rise from 21.7 per cent to 27.4 per cent over the next decade.

It’s not a pretty picture.

The picture is even less pretty for the thousands of individuals who will pushed into the top tax bracket, which kicks in at $180,000… “This makes the top marginal rate 49 per cent, giving a 10 per cent hike in the marginal tax rate, so beyond $180,000 the employee loses almost half of every extra dollar earned…” notes HLB Mann Judd Sydney taxation services partner Peter Bembrick.

For families at the lower end of the pay scale, increased earnings can also mean the unwelcome end of government benefits, such as family tax benefits.

“It is important that people know their effective tax rate and not just their marginal tax rate to determine if how hard they are working is worthwhile, especially those in the lower brackets,” says the managing director of  BFG Financial Services, Suzanne Haddan.

Prescott Securities senior economist and financial adviser Alan Hutchinson says there are a number of options for taxpayers who are in danger of jumping into a higher tax bracket.

Cutting back on the hours worked is one option, although possibly not the best if there are mortgages and school fees to pay, he says. Another strategy is salary sacrificing into superannuation.

“Salary sacrificing is the main strategy available to people wanting to avoid bracket creep, and it is the one that works,” says Hutchinson.

ipacSecurities head of technical services Colin Lewis says salary-packaging motor vehicles and laptops used for work-related purposes may be an option for some employees as a way of reducing assessable income.

Employees of public benevolent institutions such as public hospitals or not-for-profit organisations are still able to salary-package almost anything including living expenses, education costs, loan and mortgage repayments, rent, credit card payments and bills, he says.

AFR Contributor

*Source Bina Brown – Australian Financial Review

See the full report here.

2014 Federal Budget


FBT rate
The FBT rate is being increased from 47% to 49% to align with the highest marginal tax rate inclusive of the Temporary Budget Repair Levy of 2%. Whilst the increased income tax rate will apply from 1 July 2014, the increased FBT rate will not apply until 1 April 2015. Further, whilst the Temporary Budget Repair Levy applies until 30 June 2017, the FBT rate is to drop again as of 1 April 2017.

Changing the FBT rate also changes the FBT gross-up rates, as follows:

2014-15 FBT year 2015-16 FBT year 2016-17 FBT year 2017-18 FBT year
FBT rate 47% 49% 49% 47%
Type 1 gross-up 2.0802 2.1463 2.1463 2.0802
Type 2 gross-up 1.8868 1.9608 1.9608 1.8868

Salary packaging
The reason for increasing the FBT rate is stated to be “To prevent high income earners from utilising fringe benefits to avoid the levy”. But you would need to salary package a lot of income to take advantage of this 2% differential. For instance, packaging $20,000 would only produce a saving of around $400.

So whilst there appears to be an opportunity in both the year ending 30 June 2015 and the year ending 30 June 2017, for high income earners to take fringe benefits in the period where the lower FBT rate applies, it would only be useful to the extent the employee earns above $180,000 and the minimal savings probably mean they are unlikely to bother.

Not-for-profit caps
In order to protect the value of fringe benefits provided in the not-for-profit sector, that otherwise diminishes with an FBT rate increase, the annual caps for concessional treatment are to be increased. Confirmation of the new amounts has not yet been provided.

FBT rebate
The FBT rebate (currently 48%) is to be aligned with the FBT rate as of 1 April 2015.

Leight Penberthy
Chief Executive Office

*Source Elizabeth Lucas – Grant Thornton Australia

New deal a PLUS for Sharks

The Cronulla Sharks have joined forces with finance and leasing services company LeasePLUS in what can be described as an Australian first.

One of Australia’s most respected financial services companies, LeasePLUS have partnered with the Sharks to offer a wide range of vehicle finance and leasing services to the clubs’ wider corporate network of clients, members, sponsors and fans, as well as to organisations within the Sutherland Shire and wider Sydney community.

These services include Novated and Operating leases, Fleet Management, Vehicle sourcing and a range of other salary packaging opportunities.

To be known as SharksPLUS, the new business officially opened its doors in early March and will be powered by the experienced team at LeasePLUS, a company which operates under the same values of quality, respect, growth and courage that they began with over a decade ago.

Mr Aytunc Tezay, Group Managing Director at LeasePLUS explained that SharksPLUS has come about after a lot of hard work with the final product set to become a potential bonus to a wide range of Sharks stakeholders.

“We have worked with the Executive team at Cronulla Sharks for the past six months to bring this program together and we are not aware of any other initiative like it in Australia and especially in the NRL,” Mr Tezay said. “LeasePLUS were impressed with the desire for the Cronulla Sharks to provide its supporters and sponsors with what can be described as a highly valuable and tangible benefit in relation to their motor vehicles.”

Peter Legg, the Sharks General Manager Finance and Corporate Services expressed a similar belief, confident this new initiative would provide financial advantages for all concerned.

“The Sharks have a great network of corporate support, including many businesses small and large and we believe we can offer them and their staff a way to save money, while also supporting the Sharks in a different way,” Legg added.

LeasePLUS focuses on delivering a stress free process for clients looking to secure a new vehicle, with long term cost-savings with further additional benefits.

They have also made a significant investment in technology to create advanced systems across its broad range of products and services, with SharksPLUS having immediate access to this advanced technology delivering client centric solutions with a minimum of fuss to its clients.

LeasePLUS further supports the relationship with the Sharks through its knowledge and experience across a broad range of industries including healthcare, emergency services and other corporate sectors.

However it is LeasePLUS’s industry leading customer service to both the employers and their employees that remain the major platform for future growth and success and makes LeasePLUS certain they can deliver significant value to this newly formed partnership with the Sharks.

To find out more, or to speak with a SharksPLUS consultant, call Customer service on 1300 79 95 47, email info@sharksplus.com.au, or go to the website at www.sharksplus.com.au.

Read the article here

Renegades fill sponsor roster

Pictured: LeasePLUS Managing Director Aytunc Tezay and CEO Leigh Penberthy.

The Melbourne Renegades has today finalised its BBL|03 sponsorship roster, filling all available tiers for the first time in the club’s short history.

The most recent additions include LeasePLUS and Nunawading Toyota as Vehicle Suppliers, the Department of Justice for a second consecutive season as Community Partner, Asahi Premium Beverages’ Pty Ltd (APB) boutique beer brand Cricketers Arms as Official Beer Partner, and travel industry heavyweight Flight Centre as the Official Travel Partner for BBL|03.

Deal extensions have also been secured with The Olsen Hotel in South Yarra, O’Leary Walker Wines, and Coca-Cola Amatil – Powerade. Variety – The Children’s Charity has returned for a second season as Charity Partner.

LeasePLUS Managing Director Aytunc Tezay said LeasePLUS was proud to again be the Melbourne Renegades’ Official Vehicle Supplier.

“We’ll be working with the club to keep them mobile in our cars so they can focus on winning games, which is what they do best,” Tezay said.

Melbourne Renegades CEO Stuart Coventry welcomed Nunawading Toyota on board for its debut season with the club and LeasePLUS for its second consecutive year.

“We’re very happy to extend our partnership with LeasePLUS after an extremely successful season in BBL|02,” Coventry said.

“We’ll be applying the same trademark Renegades decals to each vehicle again this summer, so look out when you’re driving around Melbourne. You never know if you’ll be pulling up at the lights next to Murali, Siddle, Finch or another member of the team.”

The full book of sponsors, headed by Principal Partner True Value Solar, marks another step forward for the Melbourne Renegades and caps a remarkable turnaround in the club’s fortunes both on and off the field.

The Renegades sealed last season’s minor premiership and produced some of the highest television viewership numbers ever seen on former host broadcaster Fox Sports.

More than four million Australians have tuned-in to Renegades matches during the first two seasons of the tournament, netting an average of 252,000 viewers per game.

Led by CEO Stuart Coventry and with a host of Australian and international cricket superstars – including club captain and regular T20I/ODI opening batsman Aaron Finch, the world’s leading Test wicket-taker Muthiah Muralidaran, Australia Test opening bowlers Peter Siddle and James Pattinson, England ODI and T20I powerhouse Jos Buttler, the ICC Player rankings world number two-ranked ODI all-rounder Mohammad Hafeez, Australia T20I leg-spinner Fawad Ahmed and Australia T20I batsman Ben Rohrer – the Renegades have featured in eight of the 20 highest-rating regular-season matches in BBL history.

Coventry said the KFC T20 Big Bash League’s new partnership with Network TEN would see all games broadcast live across a five-year contract, generating new demand for sponsorship opportunities.

“The commercial opportunities these new broadcast deals create for the Renegades and the competition are enormous. I’m confident we’ll put our best foot forward in what is shaping to be a massive season for the BBL,” Coventry said.

“We have an exciting product, a free-to-air television deal with Network TEN and broadcast deals with 3AW and Austereo. On top of this solid media spread comes the Renegades exciting brand of cricket and our amazing at-match entertainment, which combine to make Renegades home matches a ‘must see’.”

Melbourne Renegades BBL|03 Squad: Aaron Finch (c), Fawad Ahmed, Jos Buttler, Tom Cooper, Alex Doolan,  Matthew Gale, Mohammad Hafeez, Daniel Harris, Jayde Herrick, Michael Hill, Solomon Mire (community rookie), Muthiah Muralidaran, Peter Nevill, Aaron O’Brien, James Pattinson, Nathan Rimmington, Ben Rohrer, Will Sheridan, Matthew Short (development rookie), Peter Siddle.

Melbourne Renegades BBL|03 sponsors:

Principal Partner – True Value Solar
Major Partner – Bartercard
Community Partners – TAC (Wipe off 5 – Ballarat Bush Bash), Department of Justice
Official Sponsors – Flight Centre, Cricketers Arms, The Olsen Hotel, LeasePLUS and Nunawading Toyota, O’Leary Walker Wines, Coca-Cola Amatil – Powerade
Charity Partner – Variety – The Children’s Charity

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