Car buyers return as FBT changes flop
Several firms have begun rehiring staff who were stood down after the former Labor government sprung unexpected FBT adjustments on the industry back in July.
Danny Wilson, director of leasing company NLC - one of the top five salary package providers for new cars in Australia - said his firm had rehired 23 of the 72 staff stood down after Labor's divisive announcement.
"We started 23 people back at work this week and we'll keep an eye on demand, and if that keeps getting stronger we'll keep improving our staffing levels," he said.
"We saw sales start to return almost immediately after the election - even from the Monday or Tuesday.
"We're below what we're normally projected to be at this time but I think we're trending towards that 75 to 80 per cent mark. In terms of the sales levels, it does take some time for those to work through your system, but in terms of our inquiry levels, we're up to that 75 per cent mark."
Prime minister-elect Tony Abbott promised to reverse the changes if voted to power, reintroducing a statutory formula for business vehicles which provided significant tax concessions.
Despite the change in government, there is still some confusion at the consumer level as to whether the Labor government's FBT changes still applied.
Gilbert Bratby, from the Manildra Group on the NSW south coast, said his firm had held off on buying new vehicles.
"My company is awaiting such clarity before we order, buy or lease any new cars. We have about five orders waiting," he said.
The president of the Australian Salary Packaging Industry Association, Leigh Penberthy, said the industry was working with business with the hope of attracting fresh demand. "With the Liberal government now in place, there is no new law to be passed because there were no changes made to the tax law," he said.
"Effectively, it's now pretty much as it was prior to July 16, and I guess the industry has got to get back on with business."
Mr Wilson envisaged fleet sales would remain relatively flat throughout the remainder of the year. "I would think that the remainder of the year will be softer than what we would have otherwise expected it to be but I'm sure that in 2014 we will see things really get back to full strength," he said.
"The big question for us is whether this is just the releasing of pent-up demand or can these sales be sustained looking onwards. We're looking to see how we're trending heading into October, but it's certainly been a reasonably positive start post the election."
Under the controversial changes made to the FBT in July, leasing customers were made to use a log book or app to detail variances between personal and business use of a leased vehicle.
The returning statutory formula method is simpler and provides a significant tax concession to those who mainly used their car for private purposes because it assumes the majority use is for business.
Frequently Asked Questions about this Article…
Car buyers returned quickly because the Coalition moved to reverse the controversial fringe benefits tax (FBT) changes introduced in July. The incoming government promised to reinstate the simpler statutory formula for business vehicles, which restored tax concessions and reduced uncertainty for buyers and lessees.
The July FBT changes forced some leasing firms to stand down staff and pause sales because customers faced new compliance rules. For example, NLC stood down 72 people and has since rehired 23 after demand started returning following the election.
The statutory formula is a simpler FBT method that assumes a fixed proportion of business use for a vehicle, offering significant tax concessions—especially for people who mainly use cars privately. Returning to that method reduces the paperwork and tax cost compared with the logbook/app approach introduced in July.
Yes. Under the July changes, leasing customers were required to use a logbook or app to detail business-versus-personal use. With the Coalition reversing those changes, industry leaders say rules are effectively back to how they were before July 16, removing that mandatory tracking requirement introduced in July.
The article quoted Danny Wilson from leasing company NLC (one of Australia’s top five salary package providers for new cars), Gilbert Bratby from the Manildra Group, and Leigh Penberthy, president of the Australian Salary Packaging Industry Association, all commenting on renewed demand and industry reaction.
Industry sources reported a rapid turnaround: NLC said sales started to return almost immediately (by the Monday or Tuesday after the election) and that enquiry levels were back up to about the 75% mark, with sales trending toward 75–80% of normal levels.
Industry commentators expect fleet sales to remain relatively flat for the remainder of the year—softer than previously forecast—but they are hopeful of a stronger recovery in the following year. There is some uncertainty about whether initial post-election demand is just pent-up buying or can be sustained.
Monitor government policy and official guidance to confirm that rules have reverted to pre-July arrangements, watch leasing inquiry and sales trends (which have already started improving), and follow industry commentary from groups like the Australian Salary Packaging Industry Association and major providers such as NLC to time leasing or fleet purchases.
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