FBT changes in budget will affect council cars

The announcement in the Federal Budget that the sliding scale of FBT payments based on the kilometres travelled by the car is to be scrapped and replaced with a standard 20% tax is currently being digested by the industry.

It never made any sense to have a tax which reduced if you travel more kilometres. This additional travel increased other costs and its encouragement to emit more carbon.

Already some councils are threatening employees that they will try to recoup the increases in FBT from them as part of leaseback fees but these councils are missing the point that providing employees with private use of cars clearly benefits the Council as well as the employees concerned and that this is not an appropriate course of action. Imagine a council trying to recruit you lot without offering a car.

Clause 15 of the State Award restricts councils to increases of less than 10% anyway.

The new statutory rate will be phased in from 10 May 2011 over four years.

The single rate of 20% will:

• Increase the tax concession provided for cars driven less than 15,000 km a year;

• maintain the current tax concession provided for vehicles driven between 15,000 and 25,000 km a year; and

• decrease the tax concession provided for vehicles driven more than 25,000 km a year.

It will be cars travelling more than 25,000 km per annum that will be the problem.

We have organised a meeting with the LGSA to discuss the impact of these changes on councils and their fleets so that we can better manage this issue across the industry. That meeting will be held on 6 June and we will report in June's depaNews.

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