FBT not helping Ford

[buggerlugs]

http://www.news.com.au/business/comp...-1226702317481

[JG66ME]

People are holding off until the election outcome. I have just bought my lease car rather than lease new. FBT changes will not happen unless Labor win the election. If this happens I will stick with my old car. If it doesn't then I will wait for the 2014 Falcon release and it will be a new XR6 Turbo Luxury Pack Manual on a novated lease. I am sure many are thinking the same.

[jpd80]

What will be interesting to see is IF we have a change of government and FBT decisions are reversed,
I wonder if Ford might see a nice little back log novated lease buyers wanting delivery before Christmas...

A return to the old schedule

0 – 15,000 km...........................26%
15,000 – 25,000 km..................20%
25,000 – 40,000 km..................11%
More than 40,000 km.................7%

[mr smith]

I've put my XR6 sedan on ice. Order was in for an XR6 lpi. One less Falcon:(

[Elks]

Originally Posted by jpd80

What will be interesting to see is IF we have a change of government and FBT decisions are reversed,
I wonder if Ford might see a nice little back log novated lease buyers wanting delivery before Christmas...

A return to the old schedule

0 – 15,000 km...........................26%
15,000 – 25,000 km..................20%
25,000 – 40,000 km..................11%
More than 40,000 km.................7%

Sorry to be nit picky, jpd.

But the GovCo changed the rate to a flat 20% in 2011 as a part of deal with the Greens for something or other. The theory being that people would stop wasting fuel driving around to achieve there 25,001 km, and achieve the 11% as a part of the Statutory Method.

[Wretched]

I don't think Ford can blame the FBT changes on poor sales.
That slippery slope started long a go.

[ILLaViTaR]

Originally Posted by Elks

Sorry to be nit picky, jpd.

But the GovCo changed the rate to a flat 20% in 2011 as a part of deal with the Greens for something or other. The theory being that people would stop wasting fuel driving around to achieve there 25,001 km, and achieve the 11% as a part of the Statutory Method.

LOL because that's what they all do. In the real world!!!
Drive around the country like dudly do right to meet their quota... Not just lie as the odometer can't distinguish private/commercial use to the ATO therefore leaving the incredibly unregulated option open to every fbt recipient to simply assign his private kilometers over to is business tally if he's a bit short of his 25000...

Yep I just love how in touch with reality the Greens are. How are people allowed to be so stupid, I mean they're actually expecting that this will work, pffft even I would claim short instead of driving my car around unnecessarily it's just stupid. The point though really is these people clearly don't deserve this particular tax benefit, if you have to set aside additional trips burning a car for a tax then there's a rort issue as far as I'm concerned as no one should find it financially beneficial to drive their vehicle around... justify that one. I mean I'm glad people think it's ok to put our surplus into their roadtrips and all. Greed is good! I'd just like someone to pay for my next road trip, a fair go after all

But yeah that is the stupidest theory I've ever heard, and as if they didn't know that when they proposed it. I'm sure if we all left 1000 styrofoam cups in our backyards in every house we could all solve our apparent water crisis too! I can see everyone doing that!!!

[ILLaViTaR]

Originally Posted by buggerlugs

http://www.news.com.au/business/comp...-1226702317481

Tim O'Brien | Aug 10, 2013

At the heart of this issue is novated leasing. Its rapid rise and spread through corporate Australia was driven by a generous tax concession for those lucky enough to enjoy ‘salary packaging’ as part of their employment.

And this, in turn, fed a market distortion that became one of the key factors in the decline of local brands in this market.

It is novated leasing that sits behind the FBT tax perk that, as of next April, will not apply automatically (via the statutory method of reporting), but will need to be substantiated via a vehicle log to be claimed.

And, for the sake of definition, let’s just agree on the conventional meaning of “perk”, and that is, a little side benefit of a job.

Originally, salary packaging was an executive perk.

But it didn’t take long for a new industry to spring up around it: salary packaging professionals who, for a fee, crunched the numbers to provide a suite of off-the-shelf ‘salary packages’ for the employees of companies, government departments and NGOs prepared to pay for the number crunching.

This industry did not, in any other way, contribute to the Australian economy. It sprang up to service the perk.

[Bossxr8]

Originally Posted by Wretched

I don't think Ford can blame the FBT changes on poor sales.
That slippery slope started long a go.

But it made it a lot worse didn't it. There are a heap of cars sitting at Broady from orders put on hold due to the FBT proposed changes, including a heap of Ford company lease vehicles, as the companies lease program has been put on hold.

[Wretched]

Originally Posted by Bossxr8

But it made it a lot worse didn't it. There are a heap of cars sitting at Broady from orders put on hold due to the FBT proposed changes, including a heap of Ford company lease vehicles, as the companies lease program has been put on hold.

So instead of 700 Falcons being sold for the month they sell 500. hmmm

[ILLaViTaR]

Originally Posted by Bossxr8

But it made it a lot worse didn't it. There are a heap of cars sitting at Broady from orders put on hold due to the FBT proposed changes, including a heap of Ford company lease vehicles, as the companies lease program has been put on hold.

The article in my post explains how that's due to the fbt in the first place. It doesn't help the economy at all, only the perk. Technically the FBT hurts the economy as we give billions back to these people in tax dollars for cars they don't need.

Sure the car industry would be screwed. But the economy? Not so much.

[Bossxr8]

Originally Posted by Wretched

So instead of 700 Falcons being sold for the month they sell 500. hmmm

They sold over 1100 the previous month, so what are you on about?

[Wretched]

Originally Posted by Bossxr8

They sold over 1100 the previous month, so what are you on about?

based on last month's figures
http://www.fordforums.com.au/showpos...&postcount=191

[Elks]

There is several factors at work here. The FBT changes affect all cars from all manufacturers, pretty much equally, except for the main "packaged" vehicles. Being Commodore, Flacon, Camry & Madza 3. Yes the Mazda three is amongst the favourites as a user chooser car.

All the people being all high and mighty and calling this a rort are forgetting the origins of all this. Once upon a time people got company cars. Usually falcons and commodores. This was a part of there job for reps and perk for managers. The GovCo wanted to cut off the perk and leave the sales reps alone. Logbooking was/is an admin nightmare, and easily manipulated, so they introduced the Statutory method, a sliding scale as outlined by jpd. An agreed fixed amount of FBT to be paid based on the purchase value of the car, and then "grossed up" to reflect the before tax value. The theory being that reps do lots of km for work so the more km you do the less of a perk, so less FBT impact. This all started under the Keating Govt in the late 80's.

At a 20% FBT rate, the Gov collects about $7,600 per annum in FBT from a $40,000 vehicle. These days that is usually deducted from the employees salary as a "contribution".

Twin cab utes are easily exempt from the FBT. At $7,600 pa are still wondering why they are suddenly popular.

Over the last decade the gov worked out they could retain GovCo and related health/charity/council and other quasi govt employees by allowing them what are relatively good salary packaging options, including cars in lieu of real pay rises. So you have this discrepancy, particularly in Health where you earn less working for the govt but that is offset, at least in part by the packaging benefits. A bit of left pocket right pocket stuff by the GovCo.

So many people took advantage and packaged a car. Hence the number of Mazda3's.

Now the Gov scrambling for cash has sought to close that imagined loophole. Fine in principle. However that will lead to a requirement over the next few years to either increase wages to get within a reasonable distance of the private sector (currently the gap is huge, but offset by the benefits) or expect to lose a bunch of staff.

Reputed to be 1/3 of the entire car market tied up in this mess. salary sacrifice packaging is where the fleet market went. So this has hit most models from most manufacturers. But the local cars were hit hardest. Lets face it, the Gov expected to collect $1.8billion from this change. So there must be an impact somewhere.

Now back to our beloved Falcon, it was already standing on the edge of a cliff. So it's very easy to a change this large, announced without notice could tip it over the edge. It's plummeting now.

T

[jpd80]

and when you realise that the novated lease affected are mostly government workers, the end aim becomes even more obvious.
Rudd moved to close a loop hole which mostly affected government workers through a system as described above by Elks to
retain what department heads considered valuable employees.

Now the axe drops, the government does not get the FBT revenue it planned, govco loses it valued employees and a whole
industry set up to generate business activity in leasing cars is kaput..

But it didn't have to be this way, none of this including the changes to appease the greens needed to happen.
All of it was a huge greedy stuff up that had huge consequences the politicians could not fathom.

My only hope is this stupidity ends next month and a new government with a sweeping mandate puts things right
by returning all previous novated lease conditions to where they were before this government went off track.

[rods falcon]

Originally Posted by Elks

At a 20% FBT rate, the Gov collects about $7,600 per annum in FBT from a $40,000 vehicle. These days that is usually deducted from the employees salary as a "contribution".

Twin cab utes are easily exempt from the FBT. At $7,600 pa are still wondering why they are suddenly popular.

T

This is the annoying part of all this. From some of the commentary you would think that the benefit is free. There is a contribution made towards the FBT liability.

The twin cab rules do need to be tightened, although technically there are only exempt from the car FBT rules, not from FBT overall unless the private use is minor or infrequent.

[PepeLePew]

It's interesting to consider how many active novated leases are out there, voters who are now aware if they return the Government it's likely to be their last. Lurk/perk/package, call it what you will. It has significant power as a vote changer, which surely the government foresaw, yet perhaps thought they could rile the masses with official talk of 'rort' 'BMW' and the other emotive stuff they love to sprout when they treat us as unintelligent sheep (that one will go down in history)

Some great points above about the origin of the novated lease thanks Elks.

[LTDmonger]

Why can't they just exempt Australian made cars from this proposed policy?
It might give the industry a boost.
On one hand they are pledging future funds/support for the local industry and on the other hand with the FBT... taking sales away.
Sounds like a classic case of robbing Peter to pay Paul.
Textbook idiots.