Important Considerations Regarding Salary Packaging a Motor Vehicle

For those who are considering salary packaging a motor vehicle or upgrading a salary packaged motor vehicle, you need to be aware of the changes announced in the 2011 Federal Budget.

There have been significant changes to the way in which Fringe Benefits Tax is calculated on motor vehicle fringe benefits.  For those clients who calculate their FBT liability based on the number of kilometres which they travel, there is a gradual change to the statutory rates over the next few years.  As can be seen from the table below, in the past the more kilometres that were travelled, the lower the FBT.  However, by 2014, regardless of the number of kilometres travelled the FBT will be the same amount.  This is important because for employees this means additional amounts will need to be deducted from your wages to cover the FBT.  For company owners, it means more expense that comes off the bottom line.

New FBT Statutory Value Tables - Budget Changes 10 May 2011
	Distance travelled during the FBT year (1 April – 31 March)	Statutory rate (multiplied by the cost of the car to determine a person's car fringe benefit)
		Existing contracts	New contracts entered into after 7:30pm (AEST) on 10 May 2011
			From 10 May 2011	From 1 April 2012	From 1 April 2013	From 1 April 2014
	0 – 15,000 km	0.26	0.2	0.2	0.2	0.2
	15,000 – 25,000 km	0.2	0.2	0.2	0.2	0.2
	25,000 – 40,000 km	0.11	0.14	0.17	0.2	0.2
	More than 40,000 km	0.07	0.1	0.13	0.17	0.2

Therefore when planning to upgrade your salary packaged vehicle or take out a new salary packaged vehicle, the sooner that you sign a new contract the lower the FBT will be.

If you have any queries or would like to discuss the benefits of salary packaging a vehicle, please do not hesitate to contact this office on 9482 4244.    If you require a lease finance quote we would be pleased to obtain one for you at no cost or obligation.