New Oz Government to Kill New Tax on Leased Vehicles

The incoming Australian coalition government, calling the previous Labor government’s fringe-benefits tax (FBT) a job-destroying hit on the auto-leasing industry, says the measure is “dead, buried and cremated” with its victory in the federal election.

The latest figures show the Liberal-National coalition won 89 seats in the House of Parliament to Labor’s 57. The previous election saw the two parties deadlocked at 72 seats apiece, but Labor ruled with the backing of minor parties and independents.

Coalition Finance spokesman Andrew Robb says scrapping the FBT on the car industry should be seen as a symbol that Australia will be open for business when Tony Abbott is sworn in as prime minister.

“This decision, which Labor made without any consultation, immediately resulted in job losses in the leasing industry and threatened to erode the pay and conditions of hundreds of thousands of workers with employer-provided, salary-sacrificed vehicles,” Robb says in a statement.

The changes would have required car owners to keep a logbook to differentiate between business and private travel and for employers to work out and collect tax on private use of the vehicles. Previously employees could claim a flat 20% mileage rate.

The new system was seen as time-consuming and expensive, and employers reacted by quickly canceling orders for new leased vehicles. The impact was immediate, with August light-vehicles sales falling 0.2% year-on-year to 93,336 units in what previously was a rising market.

“After discussions with business, charities, the not-for-profit sector, local councils as well as the automotive industry, it was clear to us that Labor’s unexpected change to FBT treatment would have dire consequences,” Robb says.

The automotive sector is to be congratulated for the strong stand it took, he says. “The removal of this noose from around the industry’s neck will allow it to get back to business and plan for the future with a sense of certainty and stability,” Robb says.

The Victoria Automotive Chamber of Commerce welcomes the coalition’s election victory and the announcement that the FBT policy will be reversed immediately.

“It will take many months for new-car dealers to overcome the problems caused by the FBT changes, and the official announcement by Robb will help restore confidence in the retail automotive sector,” VACC Executive Director David Purchase says in a statement.

VACC wants the new government to go farther, however: It is calling for the Abbott government to continue supporting the local auto- manufacturing industry and give the Australian Competition and Consumer Commission more powers to stop big business dominating small business.

It wants more government consultation, discussion and partnerships with the repair, service and retail automotive industry and more incentives for small-business owners to employ, train and retain staff.