Car fringe benefit contracts entered into after 16 July 2013 can no longer use the Statutory Formula method, and must instead use the Operating Cost method.
Thankfully, cars under existing contracts can continue to use the statutory formula for the remainder of the arrangement or until the contract is materially varied or changed.
The result will be an increase in Fringe Benefits Tax payable in many cases, particularly where there is significant private use. (Commercial vehicles such as the popular Hilux Dual Cabs are exempt, provided they meet ATO business use requirements.)
Already, we have seen a number of salary packaging firms and fleet companies shedding staff as a result.
Provided you have the right information about salary packaging cars for your employees, you can use the Operating Cost method and compare it to a non-packaged scenario to analyse whether it is still worthwhile. In our Salary Packaging workshop, we discuss in detail how you can still package a car effectively for your staff using the new rules.