CHange of FBT rates for salary packaged cars

[pmacca]

I currently salary sacrifice 2 vehicles that are 100% private use, I catch a train to work so my wife drives one and my daughter the other.

Here are the budgeted figures for these vehicles to give an idea of how the system currently works.

Pajero VRX 2009
Estimated running costs (includes finance) $22,000
FBT (25,000k+ 11%) $6000
Total $28,000
Less company contribution ** $8,400
Total deducted from salary before tax $19,600
Residual after 3 years ~$25,000 (amount I can buy out vehicle)
** our company purchases vehicles rather than lease and can therefore claim 30% company tax as business expense

Estimated running costs (includes finance) $10,400
FBT (25,000k+ 11%) $4,800
Total $15,200
Less company contribution ** $4,560
Total deducted from salary before tax $10,640
Residual after 3 years ~$10,000 (amount I can buy out vehicle)

The change in FBT rules will impact my Pajero.

One other option is to get a vehicle that is FBT exempt, in the past this was typically utes. In the area I work there are at least 9 of my workmates that recently salary sacrificed the base model Pajero. The ATO has ruled that this vehicle is also exempt, something to do with the fact it is only a 5 seater and not 7 like mine. As you can see that takes a large chunk out of the package straight away. Even though they get the base model they are still able to option them up with all the bells and whistles you get on the up market model.

I personally will probably change to a ute as I want to tow a 5th wheel caravan, I will also avoid FBT altogether.

If it was not for the way we salary sacrifice there is no way I would have over $100,000 worth of cars sitting in the driveway.

Peter