FAQ: What changes were made to Novated Leases in May 2011, as part of the Federal Budget?
What changes were made to Novated Leases in May 2011, as part of the Federal Budget?
As Salary Sacrificing or a Novated Lease is a non-cash benefit provided by employers, a Fringe Benefit Tax (FBT) must be paid. The Statutory Formula Method is the most common method of FBT calculation.
On May 10 2011 the Federal Government announced changes to the Statutory Formula Method of calculation. The method of calculation was previously based on the annualised distance travelled, but now has been standardised to simplify the process and reduce the incentive for people to drive further in order to increase the tax benefits.
Prior to 7.30pm (AEST) May 10 2011, FBT was calculated using the following Statutory Rates:
As of 7.30pm (AEST) May 10 2011, the following Statutory Percentage rates apply to all new vehicle contracts entered. The changes will be introduced over the next four years:
Please note that this information is of a general nature only. You should consult an accountant to obtain information specific to your situation.
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