Demand picks up as leasing sector awaits U-turn on FBT
Many of them have begun re-hiring staff who had been stood down after Kevin Rudd announced a crackdown on FBT for cars in July.
Danny Wilson, director of leasing company NLC - one of the top five salary package providers for new cars in Australia - said his company had re-hired 23 of the 72 staff stood down.
"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.
"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."
Tony Abbott had promised to dump Labor's changes if voted to power, re-introducing a statutory formula for business vehicles that 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 remain in force.
Gilbert Bratby, from the Manildra Group on the south coast, said his company had delayed purchasing 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.
Australian Salary Packaging Industry Association president 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," Mr Penberthy said.
Mr Wilson expected fleet sales to remain relatively flat for the rest 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.
Under changes made to the FBT in July, leasing customers were made to use a log book to detail variances between personal and business use of a leased vehicle.
The returning statutory formula method is much simpler and provides a tax concession to those who mainly use their car for private purposes because it assumes the main use is for business.
Frequently Asked Questions about this Article…
According to the article, demand for car leasing picked up almost immediately after the election because the Coalition promised to reverse the Labor government's fringe benefits tax (FBT) changes. Everyday investors should care because policy promises can quickly affect leasing company sales, staffing and near‑term earnings.
The article highlights NLC — identified as one of the top five salary packaging providers for new cars in Australia — which re‑hired 23 of the 72 staff it had stood down. This is a concrete example of how leasing companies have already started to respond to improving demand.
Under the July changes to fringe benefits tax described in the article, leasing customers were required to use a log book to record and detail the split between personal and business use of a leased vehicle, increasing compliance and administration for users.
The article explains the returning statutory formula method is simpler than the log book requirement. It provides a tax concession for those who mainly use their car privately because the formula assumes main use is for business, reducing the need for detailed log books.
Yes. The article cites Gilbert Bratby from the Manildra Group saying his company delayed purchasing new vehicles while awaiting clarity, with about five orders waiting. This shows corporate fleet buying can pause until tax rules are clear.
The article notes ongoing confusion at the consumer level about whether Labor's FBT changes remain in force. Industry representatives, such as Leigh Penberthy of the Australian Salary Packaging Industry Association, said the sector is working with business and pointed out there was no new law to be passed because there were no changes made to the tax law.
Danny Wilson from NLC told the article he expected fleet sales to remain relatively flat for the rest of the year and be softer than earlier projections, though he anticipated a return to fuller strength in 2014. Investors should view this as a cautious near‑term outlook tied to policy clarity and demand recovery.
Based on the article, investors should monitor government policy moves on fringe benefits tax, public statements by major leasing providers (like NLC), corporate fleet ordering activity (companies delaying purchases), staffing changes at leasing firms, and industry body commentary — all of which can signal shifts in demand and potential impacts on leasing company performance.
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