Another round of FBT changes?

Hi Readers – Simon Ellis here, taking over Deven’s blog to talk taxation.

It seems like only yesterday I was writing to advise you of an upcoming tax review with the potential to impact your salary packaging. Back then it was called “Henry” after the surname of its Treasury co-ordinator, yet here we are again not two years later discussing its far less creatively named progeny – the National Tax Forum.

It should really have been called Son of Henry, although in a way I’m glad we’re no longer giving “people” names to our legislative reviews. After all, putting a human face on tax reform is just false advertising.

Anyway, those of you who were paying attention last time would have noticed that the Government’s formal response to the 140 (or so) recommendations in the Henry review was a little on the thin side. Of all the recommendations made only a handful were adopted as policy (including the flat 20% rate for salary packaged cars) leaving the majority to languish in the “maybe one day” pile with some mouldy old Ralph and Asprey ideas.

But if you thought you’d seen the last of those recommendations then it’s now time to think again. Son of Henry is here to re-float ideas from the original Henry review, including:

  • a complete revision of benefit taxation in Australia: simplifying benefit valuation rules and moving tax obligations from employers to employees
  • “green benefits”: considering ways to encourage employers to ‘green’ their workforce by offering concessions for environmentally responsible benefits like public transport and low-emission vehicles; and
  • abolition of the tax-free cap for public hospitals and charities in favour of direct grants and other subsidies (even though the government promised not to implement this recommendation “at any stage” in its initial response).

What does this mean for our customers? Well – nothing at this stage as there’s no guarantee that anything will change in any substantial way.

But it does mean that Smartsalary will dive back into the public policy pool on behalf of salary packaging employees everywhere, and use whatever influence we have to protect your tax savings and lobby for new ones.

So while we’re in those murky waters – is there anything you’d like us to mention on your behalf?

Leave a comment here.

6 Responses to “Another round of FBT changes?”


  1. 1 Keith Satterley August 12, 2011 at 9:18 am

    Life would be so much easier if the government (via employers) would issue each public benefit organisation employee with a certificate/statement saying that they can deduct $16,050 dollars from their taxable income. it would only involve a simple addition to ones tax return procedure. Using this certificate means no one needs to provide evidence of expenditure of the threshold amount in specified ways. Since the specified ways includes credit car repayments, which may encompass almost anything, there is little justification for checking on what the allowance maybe spent on. There are considerable productivity gains to be realised if employees do not have to spend so much time providing evidence of this expenditure.

    • 2 Simon Ellis August 19, 2011 at 4:31 pm

      Hi Keith

      Easier, yes, but also much more expensive for Treasury.

      While your proposal does have obvious merit in terms of simplicity, the counter-argument is that throwing this concession open in the way you are suggesting would result in a big hit to Treasury’s tax revenue. This loss in revenue would likely be compensated through reductions in funding to the sector in other areas.

      So it might be a case of be careful what you wish for!

  2. 3 Maria Hunt August 12, 2011 at 5:21 pm

    On behalf of all us hard working carers “THANKYOU” to all who are silently fighting for our rights to FBT as we really apprieciate you efforts,keep it up and God Bless U All ..Maria H

  3. 4 John Crofts August 19, 2011 at 11:32 pm

    I do not want to see any moving of tax obligations from employers to employees – I don’t have paid employees looking after my personal tax issues.
    Greening benifits may be acceptable to some, but will be a disadvantage to myself.
    Abolition of tax-free cap is basically removing access to salary packaging – not something I want to see happen – going back to the old days when most employees were not allowed to salary package.
    The current system of grossed up value or whatever it is, could be abolished as it seems to affect some other government payments to families, which in effect disadvantages the disadvantaged, if you know what I mean.
    Cheers mate

  4. 5 Sfs August 9, 2013 at 8:28 pm

    What of the local economies that will have far less cash to spend.(from a reduction in car fbt benefits and possible pbi cap benefits)?
    Has there been a national wage increase?
    Have politicians increased salary or superannuation benefits for themselves?
    Where do families then suddenly find a few thousand dollars to fund higher power costs due to the carbon tax( or should we put in more batts)
    Vehicle types that are now novated since the flat 20% rate are more regularly moving toward a price point of $40,000 and rarely “BMW or merc or Lexus”
    What data did treasury use. The economic video snap shot showed the treasurer sitting with what seemed like 2 eighteen year olds. Lots of experience there!!!!

    • 6 ceosmartsalary August 12, 2013 at 4:26 pm

      Hi Reg

      The Australian Salary Packaging Industry Association (ASPIA) have set up a website detailing the impact of the proposed FBT legislation changes, take a look at http://www.whosnext.com.au/ for updates surrounding the proposed changes. There is also an online petition, which you can complete to help overrule the decision.

      Thanks

      Lisa – Smartsalary


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Deven Billimoria
Chief Executive Officer
Smartgroup

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