2011 Federal Budget
In the 2011 Federal Budget the Treasurer The Hon. Wayne Swan MP announced an important change to the Statutory Formula calculations for FBT on motor vehicles.
"The Government will reform the current 'Statutory Formula' method for determining the taxable value of car fringe benefits by replacing the current statutory rates with a single rate of 20 per cent that applies regardless of the distance travelled."
"This reform will apply to new contracts entered into after 7.30pm (AEST) on 10 May 2011, and will be phased in over four years."
There are no changes to novated leases entered into prior to 7.30pm (AEST) 10 May 2011.
For novated leases entered into after 10 May 2011 the following Statutory Formula transitional rates apply:
Statutory rate (multiplied by the cost of the car to determine a person’s car fringe benefit)
New contracts entered into after 7:30pm (AEST) on 10 May 2011
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Distance travelled during the FBT year (1 April – 31 March)
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Existing contracts
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From 10 May 2011
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From 1 April 2012
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From 1 April 2013
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From 1 April 2014
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Less than 15,000 km
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26%
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20%
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20%
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20%
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20%
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15,000 to 24,999 km
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20%
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20%
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20%
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20%
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20%
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25,000 to 40,000 km
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11%
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14%
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17%
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20%
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20%
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Over 40,000 km
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7%
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10%
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13%
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17%
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20%
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These changes cement the family car as one of the most effective tax savings available to employees and will drive novated leasing as the cheapest and most effective car ownership option for most Australian families.
Key benefits:
• Retains current benefit for all existing novated leases
• Allows all Australian employees to access tax benefits regardless of how far they travel each year
• Simplifies the calculation and administration of FBT for employers. This will allow a broader pool of employees to be able to benefit from vehicle salary packaging
• Makes the packaging of additional family cars traveling low kilometres attractive (e.g. spouse or university student)
• Provides freedom to explore alternate ways to travel to work including carpooling and the use of public transport. All great for our environment!
An nlc novated lease continues to offer peace of mind in a harsh economic climate for Australian families. The simplicity and convenience of a budgeted salary package covering all vehicle expenses provides surety and helps family cash flow.
Whether you are an Employer or Employee, if you would like to take advantage of the new flat rate of FBT then talk to nlc, Australia’s leading specialist in novated leasing with over 20 years experience.