The Australasian Fleet Management Association (AfMA) issued a statement, which outlined its concern over what it called “an almost complete lack of comprehension on the impact that proposed changes to the Fringe Benefit Tax (FBT) legislation will have on the wider business community.”

Under the proposed legislation, all businesses will now be required to abandon the Statutory Method which will result in a significant rise in the FBT liability, according to the AfMA statement.

“In comparing the applicable FBT payment for a vehicle, valued at $35,000, evaluated under the statutory formula of 20 percent against one using the operating cost method, with non-business usage at 80 percent, we see an increase in the FBT cost of almost 67 percent (over AUS$4,500). That’s an additional AUS$4,500 per vehicle and for a 100 vehicle fleet this equates to an additional cost of AUS$450,000 per annum,” according to the statement.

The AfMA statement continued: “In these cases, it is likely that companies would be quick to divest themselves of the vehicles by fleet reductions, and/or by providing a vehicle allowance to the affected employees as an alternative. These actions will adversely impact on new vehicle sales and initiate a rise in grey fleet vehicles (which are personally owned vehicles used for business purposes), presenting serious OH&S and sustainability issues.”

The AfMA statement concluded by noting that “adding to the impost of these changes financially and operationally, will be a dramatic increase in the administrative burden to business, requiring each vehicle to undergo a unique calculation to determine the FBT applicable each year.”

Originally posted on Automotive Fleet