The proposed change, recently announced by the current government, takes effect from the 16th July 2013 with the immediate removal of the ‘Statutory Method’ to calculate the fringe benefit on motor vehicles. The statutory method will only be available to contracts entered into before this date. All new contracts entered into on this date and after will require the use of the ‘log book’ method. This method is more complex and difficult in that it requires an employer to track costs relating to each separate car, and relies on the employees, who drive each vehicle, to adequately complete a log book for 12 weeks every four years, or whenever there is a significant change in the driving usage of the vehicle.
One of the largest areas to be affected will be to employees who ‘salary package’ cars with the benefits of the statutory method, which has given rise to a huge take up of the vehicle salary packaging in recent years.
This will obviously have a large effect on employees who get the greatest benefit from the double combination of the Motor Vehicle FBT statutory concession and the further concessions available to those who work for charities and public benevolent institutions, which have the highest take up of motor vehicle salary packaging.
At this time, there is very little factual evidence, advice or legislation regarding these changes, other than the initial announcement. However, the change and its effect are quite simple and effective, with, likely, little change to what was announced if the legislation is passed.