Footnotes

Chapter 1 - Introduction and background

[1]        The provisions of schedule 5 to the bill were examined by the Senate Economics Legislation Committee which recommended that the provisions be passed. Senate Economics Legislation Committee, Reform of the car fringe benefits tax rules: Provisions of Schedule 5 of the Tax Laws Amendment (2011 Measures No. 5) Bill 2011, June 2011.

[2]        See Journals of the Senate, 2010–11, no. 37 (23 June 2011), p. 1117.

[3]        Benefits can be provided by the employer, an associate or by a third party that has an arrangement with the employer. Also, an employee can be a current, future or former employee. See Australian Taxation Office, 'Fringe benefits tax – a guide for employers', www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/418.htm&page=4&H4 (accessed 29 October 2012). The full definition is contained in section 136 of the Fringe Benefits Tax Assessment Act 1986.

[4]        Fringe benefits also impact an employee if they receive fringe benefits that have a total taxable value of more than $2,000 in an FBT year. In these situations, the amount for the corresponding income year (1 July to 30 June) is reported on the employee's payment summary. While this amount does not form part of the employee's taxable income, it is included in certain income tests, including tests for the Medicare levy surcharge, deductions for personal super contributions and a number of tax offsets. Australian Taxation Office, 'Fringe benefits tax – what you need to know', www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/
950.htm&page=15&H15 (accessed 30 October 2012).

[5]        Grossing-up occurs as income tax is not paid on fringe benefits. After grossing-up, the taxable value of the benefit reflects the amount that would have had to have been paid as salary for the employee to pay for the benefit themselves out of their after-tax salary. Two gross-up rates (2.0647 and 1.8692) are available depending on whether the business or provider are entitled to GST credits for GST paid. The gross-up rates are linked to the rates of GST and FBT (and, therefore, income tax rates). The lower gross-up rate is used if there is no entitlement to GST credits. For more detail about calculating FBT, see www.ato.gov.au/businesses/content.
aspx?menuid=0&doc=/content/52006.htm&page=1&H1.

[6]        Prior to the 2011 amendments the rates were as follows—less than 15,000km: 26 per cent;
15,000–24,999km: 20 per cent; 25,000–40,000km: 11 per cent; over 40,000km: seven per cent.

[7]        Senate Standing Committee on Rural and Regional Affairs and Transport, Australia's future oil supply and alternative transport fuels, February 2007, p. 162.

[8]        Senate Standing Committee on Rural and Regional Affairs and Transport, Australia's future oil supply and alternative transport fuels, February 2007, p. 163.

[9]        Senate Rural and Regional Affairs and Transport References Committee's, Investment of Commonwealth and State funds in public passenger transport infrastructure and services, August 2009, pp. 72, 73.

[10]      Australia's Future Tax System Review, Australia's future tax system: Report to the Treasurer, part 2: detailed analysis, vol. 1, December 2009, p. 46.

[11]      Australia's Future Tax System Review, Australia's future tax system: Report to the Treasurer, part 2: detailed analysis, vol. 1, December 2009, pp. 47, 49.

[12]      The amendments were announced on 10 May 2011 as part of the 2011–12 Budget.

[13]      Explanatory memorandum, Tax Laws Amendment (2011 Measures No. 5) Bill 2011, paragraphs 5.11–12, 5.17–18.

[14]      Explanatory memorandum, Tax Laws Amendment (2011 Measures No. 5) Bill 2011, paragraph 5.22.

[15]      Explanatory memorandum, Tax Laws Amendment (2011 Measures No. 5) Bill 2011, paragraph 5.24.

[16]      Australian Government, 2011–12 Budget: Budget paper no. 2, May 2011, p. 23.

Chapter 2 - Key issues

[1]        Australia's Future Tax System Review, Australia's future tax system: Report to the Treasurer, part 2: detailed analysis, vol. 1, December 2009, p. 45.

[2]        Royal Automobile Club of Victoria, Submission 1, p. 2.

[3]        Australian Equipment Lessors Association and the Australian Fleet Lessors Association, Submission 2, p. 1.

[4]        Australian Equipment Lessors Association and the Australian Fleet Lessors Association, Submission 2, p. 1.

[5]        Australasian Fleet Management Association, Submission 3, p. 2. The other categories of fringe benefits included expense payments, property, housing benefits, loan fringe benefits, airline transport, debt waivers, meals, car parking, board and residual fringe benefits (i.e. fringe benefits that remain because they do not fit into more specific categories of fringe benefit).

[6]        Novated leases are a three way agreement between an employer, employee and a vehicle supplier and are usually structured under salary packaging/salary sacrifice arrangements using pre-tax income. Australasian Fleet Management Association, Submission 3, p. 3.

[7]        Australasian Fleet Management Association, Submission 3, p. 3. According to the AFMA, between 2002 and 2012 novated lease agreements as a percentage of total fleet acquisitions fluctuated from between three to 11 per cent. These figures are from annual surveys of AFMA members undertaken between 2001 and 2012.

[8]        Australasian Fleet Management Association, Submission 3, p. 3.

[9]        Australasian Fleet Management Association, Submission 3, p. 1. It is not clear what the $2.4 billion figure cited by the AFMA is based on. As noted in chapter 1, Treasury estimates that between 2010–11 and 2014–15 the government will gain $960 million in revenue. Receipts from the entire category of fringe benefit taxes are projected to increase by $1.2 billion over this period; see Australian Government, 2012–13 Budget: Budget paper no. 1, May 2012, pp. 5-29, 5-30. As also noted in chapter 1, the value of the tax expenditure associated with the statutory formula is estimated to decline from around $1.2 billion in 2011–12 to $690 million in 2014–15.

[10]      Australasian Fleet Management Association, Submission 3, p. 1.

[11]      RACV, Submission 1, p. 3.

[12]      RACV, Submission 1, p. 2.

[13]      Australasian Fleet Management Association, Submission 3, pp. 2, 6–7.

[14]      Australasian Fleet Management Association, Submission 3, p. 7.

[15]      RACV, Submission 1, p. 2.

[16]      The RACV noted that, 'as expected' this is higher than the ABS's figure for the community average for the same period of around 14,000km.

[17]      RACV, Submission 1, p. 2.

[18]      RACV, Submission 1, p. 3.

[19]      Australasian Fleet Management Association, Submission 3, pp. 4–5.

[20]      The AFMA argued that there is a disincentive for fleet managers to purchase enhanced safety or environmental features, as they will be subject to FBT (and stamp duty). Submission 3, p. 5.

[21]      Australasian Fleet Management Association, Submission 3, p. 6.

[22]      Australian Equipment Lessors Association and the Australian Fleet Lessors Association, Submission 2, p. 2.

[23]      Federal Chamber of Automotive Industries, Submission 4, p. 1.