Author archive
Extra Government Support For Australia's Car Industry…But…..
The FBT situation for Australia’s struggling local manufacturers hasn’t improved, even with the recent announcement of $200 million dollars going towards Ford, Holden and Toyota and a mere $7 million towards car suppliers, ignoring the areas that currently also needs assistance; the retail sector. The Victoria Automotive Chamber of Commerce has hit out against the Federal Government for ignoring the retail aspect, with brokers and suppliers feeling the backlash and laying off staff. VACC Executive Director David Purchase said “Our members are sick of so-called automotive industry discussions and decisions that fail to even consider the repair, service and retail sector. In this most recent example, the Federal Government has announced an automotive industry package, but failed to include the retail sector. The changes to the FBT system have hit car retailers hard and fast, with many experiencing cancelled orders and job losses. And yet, the Government’s response fails to even mention retailers, let alone compensate them.”
Mr Purchase also says that it’s pleasing the manufacturing and parts supply partners will be getting support and adds that nationally there’s 100, 000 small businesses employing 320, 000 and turning over $208 billion dollars, a significant contribution. There’s a measure of frustration as well, with Mr Purchase saying “Claims the FBT statutory formula produces a tax rort, that salary packaging companies have a business based only on a tax break, that only wealthy people take advantage of vehicle leasing or salary packaged cars, that the cars involved are luxury models and that the whole system needs cleaning up are all wrong. Clearly, the FBT changes are not about closing a tax loophole or tax rort. They are not about being even-handed. They are not about equity. The changes are all about raising revenue to fill serious budgetary holes and have been made without proper consultation and forethought.
Now that the election has been confirmed for September 7, it remains to be seen how much change will happen after that date and what damage to affected industries has been done.
FBT and the proposed changes: the fallout.
Although it has yet to be put to the proper decision makers, Kevin Rudd’s proposed changes to the Fringe Benefit Tax have already affected companies that would normally be purchasing cars for their fleet customers. Unfortunately, there’s a human cost too, with Fleetcare having to stand down around twenty staff as their orders have dropped to virtually zero. Another company, based in Perth, Fleet Network, have also removed twenty staff whilst South Melbourne based salary packaging group, NLC, have shed seventy five people and McMillan Shakespeare, a major salary sacrificing has also placed on hold a core aspect of its business.
Part of the issue is the proposal to backdate the changes, causing companies to pause their fleet purchases, such as a major Sydney based university has been forced to do. It also adds to the parlous state of affairs the local car makers have; with 35% of fleet cars made locally, the current situation has the potential to potentially hasten Holden’s local manufacturing closure whilst it negotiates for more funding to keep its manufacturing operations underway.
Automotive industry leaders have called upon Mr Rudd to withdraw the plan and discuss better options. With so many jobs at stake, it would make sense to do so.
Fringe Benefit Tax Changes: How It COULD Affect YOU.
Disclaimer: this is not intended to be taken as financial or taxation advice. Please see your accountant.
As if Australia’s flailing car industry didn’t have enough to worry about, the Labor Government’s proposed changes to Fringe Benefit Tax and the Carbon Tax have sent a chill wind through their offices as figures show that a potential extra cost of around $1400 per year per vehicle could stop the car lease industry in its tracks.
PM Rudd announced on July 16 that a reversion to a emissions trading scheme would replace the carbon tax, with part of this change involving a $1.8 billion AU cut in FBT concessions. Under current measuring methods, FBT is calculated at 20 percent of a vehicles cost, regardless of whether used for private or business use or private use via salary sacrifice, with the assumption that the car is being used for predominantly business use anyway. The change will require a comprehensive log book keeping of the vehicle’s use. The Government Minister for Transport, Joe Albanese says: “There’s a lot of people clearly fiddling the system. Those people who are salary sacrificing who use their car less than 20 per cent but claim the 20 per cent offset – less than one kilometre in every five they actually use for work – the chances are it’s not a Holden Commodore, it’s a BMW.”
Federal Climate Change Minister Mark Butler said recent technology made it possible to get a far more accurate idea of work-related car use and the Government had considered the FBT changes very carefully.
“It’s not the same as it was in the 1980s. You can download these very easy apps that use GPS systems to do the work all for you,” he said.
“You effectively just press the button, let it go and after you’ve finished marking that travel or recording that travel over the 12-week period every five years it can be automatically sent to your employer or your tax agent.”
The Federal Chamber of Automotive Industries has responded with CEO Tony Weber claiming: “The changes undermine the long-term certainty the FCAI and its members have called for from government and threatened to affect around one-third of new car sales in Australia.
“The effects will flow right through the industry, including to dealerships and service centres,” Weber said.
He said he doubted whether the government truly understood the consequences of its decision, and questioned why the industry was not consulted on such a significant change. I fear what this means for domestic manufacturing and I am urgently seeking meetings with the government to encourage them to reconsider this decision,” he said.
The Shadow Minister for Transport, Joe Hockey, had this to say at a meeting with automotive groups in western Sydney: “”This is going to be like a baseball bat to the motor vehicle industry in Australia. This is poorly thought out, there was no consultation with any stakeholders.”
Mr Hockey said 75 per cent of recipients earn less than $100,000 a year.
“They are going to be hit with a tax bill of $1400 a year, every year going forward,” he said.
Both Holden and Toyota have backed the calls from the FCAI to rethink its strategy, with other automotive industry analysts suggesting the changes further indicate an “out of touch with the real world” government, with the suggestion that technology will make the log keeping easier. It ignores the fact that the costs involved to companies to process manual log book keeping will result in higher prices of vehicles, more real time paperwork and the potential to damage the 80% fleet market sales Australian car makers have. It’s already caused one major fleet vehicle purchaser to freeze their order, pending further developments.
As stated, please consult your accountant for information, as it stands.
CarTech: What Does This Mean?
Cars today, like most forms of modern technology, come with terms and names that can be bewildering to the casual observer. Yet a cars salesperson will rattle them of without explaining them or expecting you, the prospective buyer, to just “know” what it all means…
Something we’ve seen in cars for close to twenty years now, is this: SRS Airbag. By now we should all know what an airbag does (basically explodes a pillow from the steering wheel and other locations to provide a form of protection in an impact) however the other part of the name, SRS, is quite simple. Supplementary Restraint System; meaning it’s a backup to the two primary safety factors. One being you, the driver, being able to keep yourself out of trouble and the other is the engineering already built in.
ABS is another that’s become familiar; Anti-Lock Braking System. This is also pretty simple: when you hit the stop pedal, a combined system of hydraulics and electronics engage and disengage the brakes rapidly, preventing the brake pad from constantly gripping the brake disc and causing a skid. This aids the driver in steering the car (hopefully) out of a collision situation. Two, three, four channel sensors may be batted around and this refers to how many corners of the car are being read; for example a four channel sensor reads all four wheels whereas a three channel may read the two rear wheels separately and the front together. Many drivers interpret the pulsating of the barke pedal, from the system working, as a fault. 
Brake Assist is a complement to this; a computer sensor reads a potential emergency situation and automatically increases brake pedal pressure, so when a driver stabs the brake pedal at the last minute, there’s already enough pressure activated and also tries to minimise the braking distance.
TCS/ASR are for Traction Control System/Anti Slip Regulation. The most common applications are in decreasing wheel spin under acceleration, generally from stop signs and traffic lights or when the computer system connected detects lack of traction in certain road conditions. The system may reduce power or increase brake force at the wheel corner that’s losing grip. Traction control is also most often seen as an adjunct to ABS.
Torque Vectoring is one slowly creeping into the performance and four wheel/all wheel drive side; to use a standard front engined/rear wheel drive system, the rear wheels are driven by a shaft connected to the gearbox and differential (http://en.wikipedia.org/wiki/Differential_%28mechanical_device%29) which then sends engine’s output to the left and/or right wheels. As “diffs” are a purely mechanical environment, torque vectoring needs an electronic system to vary the amount of torque between the driven wheels. In a performance application, this would add more torque to a wheel that requires more grip to help in handling and acceleration.
Collision Avoidance is another; a radar system is employed by the car to read the gap between your car and a vehicle in front and if that vehicle is read as getting closer whilst your vehicle is not braking, it then sounds an alert. As a rule, the systems also offers the driver a variety of preset distances, adjustable by the press of a button.
If you’re in the process of buying a car and the salesperson says these and you’re unsure, ask them to explain it further; you deserve that courtesy.
Level 2, 9 Help Street