ATO Tax Changes Jan 30 2018 to Dual Cabs.

[csv8]

I posted this yesterday. This is from Wheels Jan 30 2018.
https://www.wheelsmag.com.au/news/18...els_newsletter

[.:4:.]

I drive my work ute out of hours. Its not part of my pay packet however im on call 24/7. That being said it doesnt see many kays at all out of hours and i do get callouts on weekends and at night often enough. Also its not used for long trips or anything like that, the fairmont is better for that kind of thing.

[boss351290]

The tax office should have given everybody a tax break if they bought a car built in this country. No tax breaks of any kind should have applied to all other vehicles. This should have applied to salary sacrificing as well. We still would have a auto industry if the fools had some balls and looked after Australians first.

[M&Ms]

Originally Posted by boss351290

The tax office should have given everybody a tax break if they bought a car built in this country. No tax breaks of any kind should have applied to all other vehicles. This should have applied to salary sacrificing as well. We still would have a auto industry if the fools had some balls and looked after Australians first.

Exactly. Could have made Aus cars GST free, no LCT, and cheaper registration. But that's history now unfortunately; our own Governments have no idea about looking after our Country.

[Fordblue1000]

Ok. So im pretty bad when it comes to tax and that. I have a dual cab ute, as part of my salary to use as i wish - even interstate trips are ok. Will this affect how much i pay come tax time? Or just the employer?

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[commodorenutt]

FBT is paid by the employer, but that amount is declared on your group certificate, and can affect any family tax benefits you may get.
If you don' claim any FTBs, then it won't affect you.

[jpd80]

Seriously, this is preferable to being forced to do a log book every 12 months
and the whole reason why govco stepped away from that nightmare is obvious,
they don't want to pay the manpower to review it.

The ATO is basically lazy and wants business to self regulate use or face steep fines
but how the heck are they ever going to police this, they can't.

750 km limit over 50 weeks is 15 km per week....or 2 km a day...yeesh.

[jpd80]

Originally Posted by Fordblue1000

Ok. So im pretty bad when it comes to tax and that. I have a dual cab ute, as part of my salary to use as i wish - even interstate trips are ok. Will this affect how much i pay come tax time? Or just the employer?

Sent from my SM-G928I using Tapatalk

They may ask you to do a log book for three months as evidence of actual business use,
most places go through this making sure there's lots of work related trips so that
the accountants and ATO are satisfied thatr all is above board.

[commodorenutt]

I remember doing my first log book in the early 2000s. I was always on the road, and never went in the office unless it was absolutely necessary, and even then I'd do it in the middle of a day when I was in that local area. I never used the car for private things - had other cars that needed to be maintained. So it was 100% business use.

The compliance accountant hauled me in one day and asked me for the real answer. I told him that was it, and he laughed. "How can I submit that? The ATO won't believe me?" I had this discussion with a rep today actually, as the FBT year is coming up (March 31) and he's been doing a logbook since Jan 1, and has no private use - he's in a remote area, works from home, but drives out to various mine sites, so every trip is a business trip for him. But for the majority of people, it's not so clear.

What a lot of people with company cars don't understand, is driving to the office is not a business use. Driving to a client or supplier first - yes it becomes a business trip then - but directly from home to the workplace (or back home again) is considered private.
So the true "business km" amount is often far less than ideal, if the logbook is honest.

There would be thousands & thousands of company cars & utes out there over-claiming the business usage because of that, and I think this is more what the ATO is trying to stop overall - but this is aimed at an immediate loophole, which I'll get to.

The other method used for FBT on cars is the statutory method. It was ideal for those who don't use their car for business, but drive it to/from work, or for private, salary-sacrifice leasing of cars. It assumes a fixed amount of business vs private, and does not need supporting evidence or logbooks. This is what is being abused.

It allowed a "status car" company car driver (who has a company car, but really only uses it to travel to/from the office) to claim "business use" -even if there was none, and therefore pay less FBT, via the statutory amount, rather than do the logbooks that the "functional car" company car driver could easily do with a large proportion of business km, and still have a relatively low FBT penalty for it.

The only problem there, is we found out how fragile the statutory rate system was in 2013, when Labor treasurer Chris Bowen & Kevin Rudd created last minute chaos just before the election. They underhandedly, and without seeking a vote or debate on the matter, removed the statutory method overnight. It sent shockwaves through the corporate world - and fleet leasing companies were facing devastating losses.
As soon as Abbott/Liberals got in, Joe Hockey repealed it.

So what? You may say, but many, many private car owners purchase vehicles via a novated lease, and claim the statutory rate. As it's a private car, not a business car, they they can't claim business km, but there's no need - the statutory rate lets them claim it as though it's being used for business, so pre-tax income can be used for the expenses.
The employer still pays FBT on the pre-tax contributions to the novated lease, but it's far less than if the vehicle was declared as 100% private use.

This is how these schemes work - they save the end consumer money on tax (thanks to the statutory rate & paying from gross salary) which the lease companies then profit from.

If this current idea is in the wind now, it's only a matter of time before the statutory rate is in the cross-hairs, and many people will be paying a lot more FBT, and private leasing will no longer be financially viable.

But getting back to this - the current rules are that FBT is payable on all vehicles that "can" be used privately, and are:
- Passenger cars, utes, trucks, vans etc, that can carry less than 9 passengers.
- Can carry a load UNDER 1 tonne

Even of an employee takes the vehicle home, and it sits at home for 2 days of the weekend, it is seen as being AVAILABLE for private use, and the ATO still want their cash. Even if you don't actually use it, there is still a penalty on the employer (FBT) but this is reduced by the % of business vs private km.

The current EXEMPT vehicles are those that can carry 1 tonne or more. And it's a loophole many businesses have been exploiting for a long time - lots of businesses give employees a 1-tonne cab-chassis ute, yet they do minimal business km - but the employer is happy, as FBT isn't payable.

The ATO have cottoned on that dual-cab one-tonne utes are designed to carry a family, and are also FBT exempt, and have become very, very popular - not only for employer provided company vehicles, but also for privately leased vehicles, claiming the statutory rate. Hence they are losing a nice little income stream they want to stop.

But I can't see them stopping at just that - I think the stat method will be next to get an overhaul, or complete removal.

[commodorenutt]

Here's some more reading on the current laws:
http://law.ato.gov.au/atolaw/view.ht...BTGEMP%2F00008

And remember, this is only a proposal at this stage - it hasn't been enacted, and may not ever be. However, if we had Dudd as our PM, as proven in the past, he'd probably just bring it in without consultation.....

[Brazen]

Also I think pool cars are another class of an exempt vehicle? Otherwise Telstra would be paying a truckload of FBT on their incidental private use of their Commodore wagons - maybe they do pay and don’t mind?

[commodorenutt]

If pool cars can be taken home, they can incur FBT.
This is the reason many pool cars (such as the hospital where my wife works) are left there, locked up, every night, and those who use them travel to/from work in their own cars.

Ironically, many of those private cars are on private novated leases due to the state government program for employees in public health, education & emergency services to be able to benefit from what they call "salary packaging" (which is really just paying a novated lease or other allowable expense from pre-tax income).