The Government will make the tax system fairer by ensuring the Fringe Benefits Tax (FBT) exemption for cars is targeted to actual business use rather than including personal use. This ensures a more level playing field for all workers by removing a tax concession for the personal use of a salary-sacrificed or employer-provided car.
These reforms will not affect existing contracts - unless they are materially changed. Nor will it affect the 3.6 million employees, self-employed and sole traders that claim work related expenses in their income tax return when they use their own car for work. People who use their vehicle for work-related travel will still be able to use a log book to ensure the business use of the car is still exempt from FBT.
Recent technological advances, such as cheap and easy to use car log book 'apps', make keeping track of the actual business use of a car much easier today. If you have a smartphone, many of these apps are available in app stores on smartphones.
People generally only need to keep a log book for 12 weeks every 5 years.
The potential impact on individuals will depend on the extent of personal use of the car, the cost of the car and the particular circumstances of the taxpayer.
If an individual uses their vehicle for a significant amount of work-related travel, they will still be able to use the operating cost method to ensure the business use of the car is still exempt from FBT.
Effects on Australian Car Manufacturing
The Rudd Labor Government is committed to a strong car manufacturing future in Australia. Federal Labor will continue to work with companies to ensure co-investment in the industry continues and that government support is calibrated to the needs of a viable and competitive industry.
We also want to make sure that Commonwealth, State and Local Governments – as well as private fleet buyers – are buying Australian-made cars.
The greatest threat to the car industry in Australia is the Coalition, who would cut at least $500 million of auto industry assistance by 2015, and who have put assistance beyond 2015 into doubt.
Holden has confirmed that they are waiting for the result of the election before making further investment decisions. This is a tacit acknowledgement from Holden that their future manufacturing in Australia is in doubt if the Coalition go ahead with their planned cuts.