This year’s changes to FBT on company cars has been discussed at length since the announcement was made that drivers would no longer be rewarded for covering longer distances. This month we wanted to look further into the changes and how they will impact novated lease car holders.
The proposed changes will, over a four year period, end the relatively lower rates of FBT for drivers who cover more 24,999 kilometres per annum. The FBT will increase from 11% (between 25,000 and 40,000 annual kilometers) and 7% (over 40,000 annual kilometers) to a rate of 20% for all kilometre ranges.
The above table illustrates the changes which will occur over the next 4 years. Users should use their own odometer readings to understand which category they fall into.
A positive take away from the table above is that while it is true that people driving over 24,999km will have to pay higher rates of FBT in the coming years those below 14,999km will see a reduction in their FBT bill. It must also be noted that the movement towards the flat 20% rate will have significant impacts on those traveling 40,000km or more, in short it may encourage drivers to find alternatives to long distance driving.
For more information on this subject take a look at this article on FBT for Novated Leases. This change is a significant one and everyone involved will really benefit from knowing the full implications of the changes.