Holden out of Oz in 2017

[scblack]

Some people are able to salary sacrifice cars that are not used for business purposes, which is not the purpose of FBT. That is the loophole which labor tried to close, and we're correct in trying to do so.

That is PRECISELY the purpose of FBT.

FBT taxes benefits provided to staff that would otherwise have been paid from post tax income by the employee. If a vehicle is used 100% for business purposes, there is no fringe benefit provided, and therefore no FBT paid.

EVERYONE can sacrifice a vehicle if they wish (depending upon company policy). No one is excluded from that benefit if they wish to do so.

Also, LCT was introduced to make luxury Holden's and fords much better value than their European competitors.

Dene Dweller already correctly answered this: "LCT isn't veiled protectionism, it's a tax grab targeting those people who can afford higher priced cars and applies to all vehicles over the threshold not just imports."

 

[scblack]

Agreed!

I remember when the GST came in, the government was sprouting all taxes would go and be replaced with just the one 10% GST...... this was s'pose to make luxury cars cheaper.....didn't happen then, can't see it happening now either.

Sorry mate you're not right. GST replaced "Wholesale Sales Tax" which was levied on many goods. That is all it replaced.

At the same time they did get rid of many other taxes, such as some stamp duties and stuff. But they were ancillary to the broad based consumption taxation of the GST.

It was NEVER going to make luxury cars cheaper. Don't know where you got that idea from. :noidea:

 

[Dene Dweller]

Agreed!

I remember when the GST came in, the government was sprouting all taxes would go and be replaced with just the one 10% GST...... this was s'pose to make luxury cars cheaper.....didn't happen then, can't see it happening now either.

It was the state government taxes, duties etc that were supposed to go in lieu of the GST revenue, blame the states. LCT is a federal government tax and I do not recall the removal of this tax ever being a selling point.

Edit: scblack you beat me to it.

 

[floody]

FBT exemption on majority private use vehicles is pretty unnecessary. I can't see why lower income workers for the mostpart ought to subsidise a flash new car for people who can afford to run their own.

 

[Dene Dweller]

FBT exemption on majority private use vehicles is pretty unnecessary. I can't see why lower income workers for the mostpart ought to subsidise a flash new car for people who can afford to run their own.

There's no FBT expemption on majority private use vehicles. Where a vehicle is provided to an employee and the employee garages that vehicle at home each night that gives rise to a Fringe Benefit. The employees company then has to pay FBT on that vehicle to the government in accordance with the methods of calculation. No one is subsidising anyone, Fringe Benefit provided, company pays the tax.

 

[floody]

I think I did get the terminology wrong. Anyway WRT leasing Its usually a nil cost exercise for the employer as it gets added into the salary sacrificed amount, which even further reduces the employee's taxable income. Employee pays less tax, employer really doesn't pay any extra, who is picking up the tab for the reduced overall tax liability?

 

[Dene Dweller]

I think I did get the terminology wrong. Anyway WRT leasing Its usually a nil cost exercise for the employer as it gets added into the salary sacrificed amount, which even further reduces the employee's taxable income. Employee pays less tax, employer really doesn't pay any extra, who is picking up the tab for the reduced overall tax liability?

Ok, I understand the point you're making but I'll refer back to the Kerry Packer quote on the previous page it's tax minimisation. What about the situation of Joe the plumber who has his own business and work van which is claimed 100% business use but still uses the vehicle for private use. ATO would never know and this whould happen all over the place or the cash economy. This then opens up a can of worms of what one person may deem a rort when someone else does not. Have you seen how generous salary sacrifice can be for nurses and people in not for profit organisations. For me I've always taken the option of cash and purchased a second hand car, company cars are not for me.

It was easy for Rudd to target the company vehicle as he gained good mileage from the working class voters. To bad the rest of the country thought the policy was a piece of shit, which it was.

 

[floody]

Joe the plumber's work van, and Jo the PA's Hyundai Veloster are completely different though, aren't they?

 

[floody]

EVERYONE can sacrifice a vehicle if they wish (depending upon company policy). No one is excluded from that benefit if they wish to do so.

Technically, sure. Of course there are more people who don't earn enough money to feasibly salary sacrifice a vehicle than who do.

 

[Dene Dweller]

FBT exemption on majority private use vehicles is pretty unnecessary. I can't see why lower income workers for the mostpart ought to subsidise a flash new car for people who can afford to run their own.

I've thought about this one more today and no one is subsidising anyone. The overall tax revenue is the same it merely comprises of PAYG and FBT for salary packaging, whereas no salary packaged would be PAYG only. That's the whole point of FBT (and rightly so). I could do a spreadsheet and show the calculations but I can't be bothered at the moment, it is a fairly complex calculation.

It was merely Rudd trying gain political mileage

 

[scblack]

I've thought about this one more today and no one is subsidising anyone. The overall tax revenue is the same it merely comprises of PAYG and FBT for salary packaging, whereas no salary packaged would be PAYG only. That's the whole point of FBT (and rightly so). I could do a spreadsheet and show the calculations but I can't be bothered at the moment, it is a fairly complex calculation.

It was merely Rudd trying gain political mileage

I hate to build up Floody's argument, but actually there is a drop in the tax revenue - if you use the Statutory Formula method to calculate the car FBT liability. The formula is quite beneficial (particularly if you do big km's) and does result in a decent drop in tax payable by FBT salary packaging compared to an employee to pay for the same vehicle from post tax income.

Rudd was a fool trying to gain mileage out of this one - a lot of people with quite average income levels choose to package their vehicles. Many people lost their jobs from salary packaging firms because of the dickhead's statements. Yet - did we hear the outcry of how they need a government support package like we heard about the Holden workers??????

 

[Dene Dweller]

Happy to be corrected by a tax accountant and I understand the increased k's and lower FBT, however one of the Henry tax recommendations was a flat rate for the statutory formula which is currently being phased in (20% by memory).

For a company that managed its FBT properly it will result in an increased FBT liability. For people like sales reps with high work kms this change will penalise them with increased Reportable Fringe Benefits.

 

[99_FGT]

Happy to be corrected by a tax accountant and I understand the increased k's and lower FBT, however one of the Henry tax recommendations was a flat rate for the statutory formula which is currently being phased in (20% by memory).

For a company that managed its FBT properly it will result in an increased FBT liability. For people like sales reps with high work kms this change will penalise them with increased Reportable Fringe Benefits.

Fbt is calculated only on the vehicle value. If you do more km's then you pay more for fuel and running costs, reducing taxable income and also the take on GST...

 

[Dene Dweller]

Fbt is calculated only on the vehicle value. If you do more km's then you pay more for fuel and running costs, reducing taxable income and also the take on GST...

Thank you I am aware it's calculated on the vehicle value.

Increased fuel = increased fuel excise revenue.

Increased running costs reduce taxable income for the vehicle holder, increases taxable income for the service provider.

GST will be zero sum.

 

[scblack]

And now guys SPC Ardmona in Goulburn is not getting federal funds for a restructure.

They are a company owned by Coca-Cola Amatil - Australian listed company which is making very good profits.

Hmmm.

 

[al_]

Is that the point though? I'm still trying to make a decision.

I've had a welfare expert from Shep on the phone already stating that closing the factor will drive unemployment in the area from around 8% to almost 13%. He is also projecting that the rise in welfare payments in the first year will exceed the requested government aid.

And why did Cadbury get direct financial assistance, given they are also a profitable private company?

 

[John U]

And now guys SPC Ardmona in Goulburn is not getting federal funds for a restructure.

They are a company owned by Coca-Cola Amatil - Australian listed company which is making very good profits.

Hmmm.

So was it a mistake selling the company to CCA?

This is in my old neighbourhood. The impact will be fairly widespread.

 

[scblack]

Is that the point though? I'm still trying to make a decision.

That's why I say "Hmmm" I'm undecided too. But why should the federal government prop up companies controlled by viable parent entities?Otherwise the government would be handing money to every marginal factory or shop.

I've had a welfare expert from Shep on the phone already stating that closing the factor will drive unemployment in the area from around 8% to almost 13%. He is also projecting that the rise in welfare payments in the first year will exceed the requested government aid.

The affected workers will receive generous redundancy packages, so they will not walk straight onto the dole queue. Many will find other jobs. It will not mean every worker is unemployed after this factory closure.

And why did Cadbury get direct financial assistance, given they are also a profitable private company?

Can't answer that one.

 

[scblack]

So was it a mistake selling the company to CCA?

I dunno - who sold it to CCA?

 

[al_]

This press conference is painful - abbott really is a donut. Somebody needs to shoot him and put him out of his misery.