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Autopia Management

6 May 2010

FBT rules will no longer encourage driving further

In a pre-budget announcement, the Federal Government have committed to reforming FBT rules to remove the perverse incentives to drive further to obtain better tax rates.

FBT is applied to the private use of company cars and novated leases.

We've often heard about 'Mad March', the final month of the FBT year, when people drive extra distances to ensure they have travelled enough kilometres to reach the next threshold limit and get a more favourable tax rate.

Under the budget changes, a single 20% tax rate will be applied to all taxpayers driving company vehicles.  This effectively cuts the tax rate for people who drive shorter distances and increases it for those who drive further.

Greenfleet applauds this reform, which is long overdue. 

Read more in The Age, The Sydney Morning Herald or the Financial Review (full article requires subscription).