FCAI slams changes to Fringe Benefits Tax

Australia's peak automotive industry body has slammed the Rudd Government's overnight overhaul of Fringe Benefits Tax on company cars. The new tax rules which come into effect immediately are expected to affect one third of all new cars on the road and could lead to job losses across the automotive retail sector due to an anticipated sharp drop in sales.

It could also seal the fate of the manufacturing future of Holden which is in the middle of sensitive negotiations with unions and government to continue building cars beyond 2016. Holden has long said it needs "clear and consistent government policy".

However the sweeping changes to the 27-year-old FBT arrangements on company cars has spooked the industry. "This will have a dire effect across the car industry," said Federal Chamber of Automotive Industries Tony Weber.

“I fear what this means for domestic manufacturing and I am urgently seeking meetings with the Government to encourage them to reconsider. The FCAI has repeatedly called for long term certainty of and confidence in automotive and these sudden changes go completely against that."

Webber added: "The Federal Government does not truly understand the consequences of these changes. We have not been consulted and if we had we would have strongly advised against them."
Treasurer Chris Bowen says “the world has moved on from when this system was introduced in 1986”.

Rather than assume 20 per cent of a vehicle's use is personal - and charge FBT on that amount, as was the case - the Rudd Government is taking a gamble that this figure is too low. Rather than simply increase the proportion of personal use to be taxed under the FBT from, say 20 per cent to 25 per cent, the government will require every person who drives a company car to fill out detailed logbooks. It is estimated the new regulations -- which require company drivers to keep a log that splits work use and personal use -- will affect at least 1 million motorists each year.

Outspoken Holden boss Mike Devereux is away on business. Holden spokesman Sean Poppitt said: "It's too early to comment, we need to look at the policy changes in detail and assess any potential impact". Beck Angel, the spokeswoman for Toyota, the biggest seller and manufacturer of cars in Australia, said: "Our initial assessment is the proposed change has the potential to have a major impact on the new car market in Australia." 

"As market leader, this would significantly affect Toyota and in particular our locally built vehicles which are heavily reliant on sales to business and government fleets. We strongly support the FCAI's (Federal Chamber of Automotive Industries) call to Government to reconsider this policy."

This reporter is on Twitter: @JoshuaDowling