Ford Calls Quits for FPV

[WhatTheFehl312]

Certainly an interesting discussion here, I didn't realize the intricacies of what is going on. I would really hope that HSV doesn't go out. You may not realize but over here in the states we commonly lust after the cars that you guys are able to purchase, that simply don't exist here. Since Pontiac went out we really haven't had a performance 4 door option from GM (meaning the G8, which was of course a rebadged Commodore). They are attempting to bring another Holden into the states badged as a Chevrolet, called the SS.

Your only real options for a "performance" 4 door RWD car from a US Manufacturer here are the Dodge Charger and Chrysler 300 SRT-8. But quite frankly I don't like Chrysler at all.

Has GM Australia traditionally been as bad as GM North America? By that I mean, quality control issues, low build quality, etc. I love my Pontiac as much as my Subaru but when comparing build quality there IS no comparison. The Subaru has no squeaks, no rattles, the plastic feels better, etc. My Pontiac's interior falls apart any time you touch it.

It becomes a bit of a struggle here when you think about domestic vs. foreign. Here in the US, many Toyotas, Hondas, etc are made in the US (my Subaru was made in the state of Indiana), however many GMs are made in Canada, Mexico, Korea, etc. The question then becomes... which country are you actually supporting with your dollars when you buy a new car?

 

[Reaper]

Certainly an interesting discussion here, I didn't realize the intricacies of what is going on. I would really hope that HSV doesn't go out. You may not realize but over here in the states we commonly lust after the cars that you guys are able to purchase, that simply don't exist here. Since Pontiac went out we really haven't had a performance 4 door option from GM (meaning the G8, which was of course a rebadged Commodore). They are attempting to bring another Holden into the states badged as a Chevrolet, called the SS.

Your only real options for a "performance" 4 door RWD car from a US Manufacturer here are the Dodge Charger and Chrysler 300 SRT-8. But quite frankly I don't like Chrysler at all.

No Dodge Chargers in Aus. There have been whispers it's coming but nothing confirmed or official.

Has GM Australia traditionally been as bad as GM North America? By that I mean, quality control issues, low build quality, etc. I love my Pontiac as much as my Subaru but when comparing build quality there IS no comparison. The Subaru has no squeaks, no rattles, the plastic feels better, etc. My Pontiac's interior falls apart any time you touch it.

GM Australia was not brilliant in the 80's and 90's. That said, compared to GM NA they were shining lights. Things improved markedly since 2000 and had a quantum jump ahead with the VE although many don't like the material choice in the VE interiors. VF is in another league to the VE. Some of the Soob stuff is very nicely put together however a lot of their lower end stuff is just as clunky as any other car.

It becomes a bit of a struggle here when you think about domestic vs. foreign. Here in the US, many Toyotas, Hondas, etc are made in the US (my Subaru was made in the state of Indiana), however many GMs are made in Canada, Mexico, Korea, etc. The question then becomes... which country are you actually supporting with your dollars when you buy a new car?

GM, Ford and Chrysler have been handicapped for decades in NA due to the UAW holding the manufacturers over a barrel. The roots of this go back 60+ years and although they were reigned in slightly in the mid 2000's GM and Chrysler bankruptcy bought them back into line. Japanese (and Korean) manufacturers who have set up shop in NA have no such handicap as they employ (mostly) not UAW workforce.

 

[VS 5.0]

BLAME KEVIN DUDD, his FBT tax changes are going to kill local manufactures, they should be making it mandatory for any Salary Sacrifice Novated Lease to be an Australian made car,

The FBT tax changes mean that those people who are obtaining benefits that they shouldn't won't get them going forward. It's quite simple really...if you genuinely qualify for the benefits that a business use vehicle attract and can justify that by completing your log book as required you have nothing to worry about. It is those who can't justify the business use that will miss out and, imho, so they should.

Will this effect purchases of new vehicles by that part of the population that has been rolling their cars over every 2-3 years under these arrangements ? Maybe, maybe not.

Businesses have been paying the FBT liability on the vehicles. They will have the capacity to roll this expense, plus any other related costs of running a vehicle fleet that will be saved by a reduced fleet, into gross staff remuneration at no additonal cost to the business. (Not all of the vehicles effected by the change are on novated leases. Many are company owned and provided to staff as part of an overall package). It might not cover the whole benefit previously received by the driver but will certainly be better than the complete loss of the benefit. But that will be up to individual businesses, how much they value their staff and the market competition for those staff. The office junior with a novated lease on her Fiesta will probably miss out. The highly valued office manager might come out OK. Sales reps and the like genuinely on the road will see no change aside from the log book.

People get used to, and want to continue driving new cars. If their overall cash in hand doesn't fall greatly assuming the remuneration adjustments above, they will continue to buy their new cars. It is the cars that they purchase that is the contributing factor to the viability of manufacturers.

If business decides to pocket the savings from reduced FBT expense and other related costs rather than continuing to let those funds circulate through the economy would you point the finger at them for killing manufacturers ?

 

[Reaper]

The FBT tax changes mean that those people who are obtaining benefits that they shouldn't won't get them going forward. It's quite simple really...if you genuinely qualify for the benefits that a business use vehicle attract and can justify that by completing your log book as required you have nothing to worry about. It is those who can't justify the business use that will miss out and, imho, so they should.

Which benefits they shouldn't be? The FBT act and regulations are enacted to capture the tax for non cash payments to an employee. If you study the regulations for most people the FBT at the 20% deeming rate is very close to the income tax they otherwise would have paid. One of the major advantages of salsac cars is the group purchase deals many company's get thru the various manufacturers national fleet pricing. The consumer gets a new car, the company has a happy employee and the car company sells a car and govco gets a tax take. The other alternative for many is to simply not get a new car. People have to get it into their heads that there is noting inherently dodgy about company cars or other non cash payments as long as they are in accordance with the regulations.

Will this effect purchases of new vehicles by that part of the population that has been rolling their cars over every 2-3 years under these arrangements ? Maybe, maybe not.

Without doubt in the near to medium term it will have a major impact.

I should note that the Rudd stupidity has nothing to do with Fords decision to quit Australia. Rudd was looking for a way to get his greedy hands on more money and didn't consult with anybody (so much for Consultation Kev that he was claiming a few weeks back) and clearly hasn't thought things thru. Anyway I digress, this happened several months after Ford threw in the towel. Once Ford quit it was only a matter of time for FPV to fold.

 

[VS 5.0]

Which benefits they shouldn't be? The FBT act and regulations are enacted to capture the tax for non cash payments to an employee. If you study the regulations for most people the FBT at the 20% deeming rate is very close to the income tax they otherwise would have paid. One of the major advantages of salsac cars is the group purchase deals many company's get thru the various manufacturers national fleet pricing. The consumer gets a new car, the company has a happy employee and the car company sells a car and govco gets a tax take. The other alternative for many is to simply not get a new car. People have to get it into their heads that there is noting inherently dodgy about company cars or other non cash payments as long as they are in accordance with the regulations.

Agree on the purposes of the FBT rules....they apply to far more benefits than just vehicles. However I don't agree that declaring a vehicle for business use when it isn't is in line with those rules. This is what happens under the statutory method. With no log books required, there is very little the ATO can do to prove otherwise.

The beneficiary avoids the GST on the vehicle, tax on any salary sacrifice component and the FBT amount is significantly reduced by the "value" attributed to business use when there clearly isn't business use in a lot of cases. By all means create a structure where anyone can salary sacrifice a vehicle, limited to Australian manufactured vehicles if the aim is to support the local vehicle manufacturing industry, with it's own rules and regulations. But don't pretend that 100% personal use vehicles being claimed under the statutory method is legit because it isn't.

There are plenty of people who acknowledge that they can't believe they have been getting away with it for so long.

Agree, govco gets a tax take however it isn't as much as they would be getting without these schemes in place as demonstrated by the additional $1.8bn that will apparently be generated by removing the statutory method.

Besides, I am sure someone, somewhere will devise a suitable tax minimisation scheme to work around this soon enough.

But yes we do digress.

 

[Reaper]

Agree on the purposes of the FBT rules....they apply to far more benefits than just vehicles. However I don't agree that declaring a vehicle for business use when it isn't is in line with those rules. This is what happens under the statutory method. With no log books required, there is very little the ATO can do to prove otherwise.

If you use the statutory formula method it makes no mention what so ever of how much private use the car actually does. THERE IS NO DECEPTION WHAT SO EVER IF PEOPLE USE THIS METHOD! When you work back the FBT paid from that 20% nominal rate it is very close to what the average person would pay in income tax anyway. Just to be clear - it's very explicit in the regulations. There is no deception. It's not a unintended loophole - it actually has it's own section in the regulations. FYI: What is the Statutory Formula Method of calculating Fringe Benefits Tax (FBT), and how does it work? - Car Finance - stratton Australia

Nobody is declaring anything is for business use when it's actually not. This can and probably will go on to a high degree with the operating cost method and with these changes I see it only increasing exponentially. Yet another home goal by our dud government.

The beneficiary avoids the GST on the vehicle, tax on any salary sacrifice component and the FBT amount is significantly reduced by the "value" attributed to business use when there clearly isn't business use in a lot of cases. By all means create a structure where anyone can salary sacrifice a vehicle, limited to Australian manufactured vehicles if the aim is to support the local vehicle manufacturing industry, with it's own rules and regulations. But don't pretend that 100% personal use vehicles being claimed under the statutory method is legit because it isn't.

Yes the beneficiary avoids the GST but only to a certain value car (around $55k from memory). Above that amount the GST cannot be claimed as an input credit. The point is that in most cases the beneficiary will move to the used market and effectively there is no GST anyway thus govco misses out either way plus lower stamp duty on the vehicle transfer. And once again with the last line you are demonstrating a fundamental misunderstanding of the FBT act and regulations by claiming people are doing something dishonestly or fraudulently because the statutory formula makes no mention what so ever of the cars use.

Agree, govco gets a tax take however it isn't as much as they would be getting without these schemes in place as demonstrated by the additional $1.8bn that will apparently be generated by removing the statutory method.

I don't believe the $1.8bill projection what so ever. Common sense says it won't happen and like the mega billion dollar mining tax get rich failure, my tip is revenues will improve marginally at best and could very well go down.

 

[VS 5.0]

The Statutory % is the deemed private use % of the vehicle. Putting aside the transitional rules it is deemed that the vehicle is used for 20% private use (i.e. to & from work, weekend trips etc), hence FBT liability being calculated on 20% of the value of the vehicle because that is the personal, taxable benefit that the driver recieves. No FBT liability accrues for the business use portion, in this case 80%.

For drivers that do not incur business use kms to say that 80% of the vehicle's kms in the FBT year were for business use IS deceptive.

Will deception continue to occur or increase under the operating cost method ? Absolutely. That is the nature of the beast. Will it be equal to the deception that is occurring now ? Apparently unlikely given the comments from the prophets of doom.