By Julian Bajkowski
The Australian Fleet Management Association (AFMA) has intensified its campaign against Canberra’s removal of longstanding concessions for new car buyers under the Fringe Benefits Tax (FBT) regime, warning the changes could undermine both fleet and road safety.
The national group, which represents both fleet buyers and sellers, says surveys it conducted during August in a series of forums held in state capitals revealed that 90 per cent of respondents now believe that the proposed “would adversely affect their organisation financially, operationally and/or administratively.”
It’s a blunt message that the industry wants government to take notice of quickly.
AFMA reckons that 39 per cent of those polled were from government organisations suggesting, that the wind-up of the so-called ‘statutory calculation’ will hit public sector fleet operators hard.
The Federal Government announced in July that it was junking the statutory calculation mechanism, which allowed buyers to opt for a simple hit of 20 per cent on FBT irrespective of the proportion of the amount of private or business use.
The changes mean that owners will now have to keep logbooks or use logging apps to record the nature of their vehicle use, a move that has provoked widespread anger in the struggling automotive sector.
The government has argued that the statutory calculation amounts to a legacy loophole that is unfair on the wider tax base and that need owners who really use their cars mainly for work purposes would already be using logs because it was financially advantageous for them.
But AFMA begs to differ.
The group has hit out via YouTube with a video featuring AFMA acting executive director Tim Roberts spelling out the potential dire consequences.
According to AFMA, its survey has revealed that 61 per cent of the survey group it sampled “currently uses the Statutory Method for part or all of their fleet FBT calculations” and that “41 per cent of their vehicles would be adversely affected by the proposed changes.”
An important distinction that the group has made in its poll, which it says covers 126,000 vehicles, is that it “focused exclusively on passenger and light commercial fleets and excluded salary packaged novated leases.”
A big part of the safety worry is that 49 per cent of AFMA’s respondents indicated they now intend to reduce their vehicle numbers: a scenario which the association warns will lead to increased business use of private vehicles, or a phenomenon known as ‘grey fleet’.
Even though many businesses accept some ad hoc or incidental use of private cars for business purposes, the practice has been generally discouraged because of steep occupational health and safety risks.
Reasons why ‘grey fleet’ is typically regarded as an increased risk to business and government include employees typically use older cars that do not conform to safety ratings and may not be maintained to corporate fleet standards.
There is also substantially less opportunity for cost-control in areas like fuel consumption, legitimate vehicle use and ensuring that grey fleet users drive in a responsible manner.
Evidence of the probability of grey fleet increases appear to be supported by 37 per cent of AFMA survey respondents saying that they “intend to look at employee car allowances.”
The group has also warned that the survey results indicate it “is also likely that the government will experience a revenue reduction rather than their stated increase in FBT income.”
Second hand car dealers and fleet remarketers can also expect to be hit.
AFMA says that around half of all new vehicle purchases in Australia are made by fleets and that such buying feeds cars that “are both fuel efficient and possess a high level of safety features” into the second-hand retail market.
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