As expected, the 2011-2012 Federal Budget announced some significant
changes for employees salary packaging their vehicles.
From 11th May 2011, all new Novated leases will be subject to a new method
of FBT valuation that will be phased in over four years. The final result will be
that all salary packaged vehicles will be valued at 20% regardless of how many kilometres the car travels.
Below is a chart that shows the rates during the phase in period.
|
Distance travelled during the FBT year (1 April – 31 March) |
Statutory Rate |
|
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 |
26% |
20% |
20% |
20% |
20% |
|
15,000 – 25,000 km |
20% |
20% |
20% |
20% |
20% |
|
25,000 – 40,000 km |
11% |
14% |
17% |
20% |
20% |
|
More than 40,000 km |
7% |
10% |
13% |
17% |
20% |
The main points from the budget are:
§ It is important to note that all existing novated leases prior to
10th May 2011 will remain unchanged until the end of the lease.
§ Employees entering into a new lease from today will be subject to the new
rates above.
§ Vehicles travelling more than 25,000 kms per annum will be subject to a
phase in period.
§ There will still be significant benefits for employees whose vehicles travel
more than 25,000 kms per annum.
§ Vehicles travelling less than 15,000 kms per annum will benefit significantly
from the changes. A high percentage of vehicles in Australia drive less than
15,000 kms per annum so it will now become a more attractive option to
salary package a vehicle for these employees.
§ Residuals are regarded as new contracts however they will be subjected to
the new rates until the commencement of the next FBT year (April 1).
§ Current Vehicles doing less than 15,000 kms per annum cannot take
advantage of the new rate.
