Friday, July 19, 2013

Your FBT is a fail

We once had a shifty accountant. He was marvellous. We received incredible tax refunds. As I was a shift worker and could not always use public transport, he claimed travel expenses to and from work for me. This is not normally allowed. Then he disappeared and I heard later he was in big trouble with the Australian Taxation Office. The next accountant who did my next tax return said I could not claim for travel to and from work, shift worker or not. Bah!

Essentially you can't claim travel to and from work as a work related expense.

That is unless you have novated  car lease arrangement with your work. It is way too complicated for me to understand. But I did pick up that if you sign a declaration to the tax department, you novated lease will be phrased that you you use your work supplied car 80% for work and 20% privately and the tax benefit will be credited to you on that basis.

But hell has arrived and the government is clamping down because it seems the 80/20 is more like 20/80. All the government is asking is that a log book of travel is filled in for three months of five years.  Suddenly a whole industry collapses.

That is an industry built on falsely claiming driving expenses against payable tax. I look forward to seeing less black SUV cars in our inner suburbs that are funded on novated leases.

Do you know what novated means? I saw the word a few years ago while sitting in the beer garden at our local, The Palmerston. I looked up into the sky and I saw a tall building with a sign that said something about novated leases. I didn't have a clue what it was then, but now, I still don't have a clue, apart from associating novated with tax rorts.

It rather reminds me of our thriving economy, half of which is dug out of the ground and the other half building houses for immigrants, or those who they displace.

Ah, the lucky country.

12 comments:

  1. funny you should write this post. I was thinking today about doing my tax and wondering if I could claim somehow for travel costs. Damn...

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    1. Bad luck M. Not fair is it.

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  2. The FBT was designed to tax "non-salary" benefits [perks] offered by employers. Fair enough if there is some nexus between the job and the benefit. For this reason, having a boss make your car lease payments instead of giving you the money as taxable salary was not an evil rort, it was simply a matter of income tax paid by you, or fringe benefits tax [on perks] paid by your boss. One assumes the FBT initially gave the tax office more revenue than it was losing in income taxes, to have been levied in the first place.

    The FBT was then extended and fiddled with by a succession of governments [as all pea and thimble taxes are], morphing into salary sacrifice, and encouraged because sane people were letting their employer top up their super with the amount sacrificed.

    One must assume that when employers have to pay higher wages because no one wants to lease a car any more, the increased income tax collected will be larger than the loss of FBT collected. Otherwise, why bother?

    It would be poor politics to increase a tax [e.g. FBT], but less unappealing to take away a benefit - a clayton's tax which doesn't cost employers anything, and only upsets the overpaid rich employees the rest of us envy and don't care phooey about.

    The only rort I can see is that Rudd - sorry, Rudd 2013 in consensus with his cabinet - is taking something away from people which previous governments had given them in the first place. The requirement that a car lease be justified by a "used for work purposes test" seems a lot of hooey to me.

    I didn't realise some work test was already in place, [not having much cause to follow salary sacrifice arrangements]. To me, this just makes the whole leasing thing more ridiculous.
    Okay, if these arrangements are outside the law and based on widespread lies about the purpose of the car, then I'm surprised the tax office has not prosecuted people over and beyond the full extent of the law. On the other hand, if there has not been widespread and deliberate fraud, then this is a storm in a teacup designed to do nothing more than impress.

    Was it a recommendation of the Henry Tax Revue? You know, the one that cost us a bloody great fortune but which we are not allowed to see?

    Keeping a log book has always been part of the "mileage" deal. Why are lessees terrified of the log book requirement? It’s a little paper book filled in by hand and hardly difficult to manipulate. Just ask Frankston’s MLA.

    I can't define novated, but I think it has something to do with the three way deal involved. Lease is in employee's name, boss makes the payments. If employee leaves, he/she takes over responsibility for the lease.

    Only a third of cars so leased are Australian made, so it's hardly likely to kill an already terminal car industry.

    NLC services included regular processing of many salary sacrifice payments, not just cars but super, home mortgages etc. Sales employees have been "suspended" pending the outcome of the election and, as there will be no new "business" forthcoming, staff who do the processing will have less processing to do. I've heard that trading in NLC shares has also been suspended.

    The economy will continue to spiral down the gurgler the longer it takes for us to get this election over. Once businesses know who is in charge for the next three years, they will have a better idea of which dickheaded policies to allow for when assessing business risks.

    Now, immigrants and those they displace is a whole 'nother chapter. Sickening, the lot of it.

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    1. FC, after a second and close read, I have picked up some points that I was unaware of. R used to salary sacrifice to the mortgage. When that finished, he changed to his Visa card. If that salary sacrifice is not a rort, I don't know what is.

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  3. Where have all the shifty accountants gone.
    Merle.......

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    1. Probably to court, Merle.

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  4. When I moved here to my flat, the only way I could get to work was by bus, so I kept all the tickets, worked out the cost and put in my claim. Got paid. I'll do the same this year.

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    1. That's great River. I don't think it is right, but clearly they are not interested in investigating you. I just checked. Northfield isn't it?

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  5. Your very first sentence made me smile Andrew :)and also of course to get the tax info together..our accountant said if I start earning money from my photography I can claim my camera and lenses haha! like that's going to happen :)

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    1. Grace, I think the photography business is known at the moment as a crowded market. You could also claim car expenses to get you to locations, wining and dining clients......the list is endless

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  6. beautiful captures...lovely!

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  7. Thank you Kalyan. I am so pleased you liked the photos in this post.

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