Car dealers in Whitehorse reeling from impact of Federal Government changes to fringe benefits tax

August 09, 2013 | News | No Comments

Author: Melanie Gardiner

Car dealers on and around Whitehorse’s MegaMile are reeling from the impact of the Federal Government’s changes to fringe benefits tax (FBT) on cars, with ­reports of cancelled orders and phones that have fallen silent.

From April 1, 2014, employers may receive significantly higher FBT bills for salary-sacrificed or employer-owned cars, if more than 20 per cent of the car’s use is private.

In the old system, FBT was payable on 20 per cent of the cost of running the car, regardless of level of private use, which could be higher.

In the new system, drivers keep a 12-week log book every five years to show the percentage of business use.

FBT is payable on the cost of running the car multiplied by the percentage of private use.

The changes apply to cars bought after July 16 this year.

As confusion surrounds the true cost to employers, the government announced a $200 million boost for the car industry this week, while the Federal Opposition promised to scrap the plan if elected.

Federal Treasurer Chris Bowen said the government’s decision to end the carbon tax meant savings had to be made in other ­areas.

Mr Bowen labelled ­reports that the changes would cause massive damage to the car industry as “alarmist and irresponsible”.

He said legitimate business use of a car could still be salary packaged.

But Nunawading Toyota general manager Theo ­Bakirtzis said the uncertainty had spooked companies from committing to novated leases or buying fleet cars, about 30 per cent of business at the dealership, Australia’s largest.

Mr Bakirtzis said staff wrote an average of 20 deals weekly before the ­announcement, but now that had fallen to one.

“If this keeps going, we’re putting the handbrake on, and not hiring or replacing staff,” Mr Bakirtzis said.

Patterson Cheney spokesman Cameron Bertalli agreed sales had fallen “off a cliff”, with about 20 people cancelling orders.

But not every car dealer is feeling the pain.

Lexus of Blackburn general sales manager Mark Jolley said it was business as usual for the luxury car dealer, which sells only a small number of cars through novated leases.

Federal Liberal candidate for Deakin Michael Sukkar said the changes could put jobs at risk by encouraging people to opt for second-hand cars.