IMPORTANT: – Impact on Novated Leases by Federal Government Announcement
The Treasurer, recently announced changes to the FBT (fringe benefit tax) options that affect in particular novated leases and employer provided company vehicles managed under the FBT statutory formula.
What is this impact: –
- Existing lease extensions after 16/07/2013
- Extension now and ending prior to 31/03/2014 changes will have no impact
- Extension beyond 01/04/2014 will be impacted (if FBT statutory formula is abolished)
- Current Novated leases
- No impact for the term of the lease unless a material variation in the lease occurs after 16/07/2013
- Agreements signed on or before 16/07/2013 but vehicle not yet delivered
- No impact for term of lease (as above)
- Existing quotes accepted on or before 16/07/2013
- No impact as quote accepted and financial liability commitment (further clarification is being requested on this)
- New Novated leases (if not in one of the above category)
- No impact if using logbook (operating cost) method
- FBT impact will change as of 01/04/2014
We understand that for these changes to apply, legislation still has to be passed through parliament.
Any employees who use their vehicle for work-related travel will still access significant benefits and can utilise a log book to reduce the impact of FBT in respect of business use of the vehicle, a log book for 12 weeks over a 5 year period.
We are, as is the whole vehicle related industry looking for clarification on the impacts and ramifications for the employees and company vehicle fleets. As this proposed FBT change is not legislated and is likely to be subject to whoever wins at the next election we recommend employees take their own professional and/or legal advice prior to entering into a Novated lease contract.
We will continue to advise our customers as information is provided to us.