A planned federal government change to fringe benefits tax (FBT) claims for cars would increase costs and the administrative burden for brokers and their clients, argues MFAA CEO, Phil Naylor.
"This has created confusion and will increase costs for member finance brokers dealing with clients on this matter and on many business owners themselves. It also increases the administrative workload on businesses and employees,” he says.
Naylor says businesses and financial advisers require certainty and that an abrupt change like this one doesn’t give people confidence that they can make long-term decisions.
“The changes were developed without any input from industry and will affect the entire automotive supply chain from the manufacturer through to the brokers who give professional advice and provide finance to business,” says Naylor.
FBT is calculated by one of two methods. The so-called statutory 80-20 method assumes 80% of use is for business and 20% is for private purposes.
The planned changes will no longer allow workers to claim a 20% tax concession on the cost of their cars without proof. A log book can be used to record exact usage.
In both cases, private use is subject to FBT which is paid by the company. Under the planned changes, the 80-20 method will be scrapped and log books made compulsory.