McMillan Shakespeare suspends trading
BY MIKE COSTELLO | 18th Jul 2013
The suspension effectively extends the ASX-approved 48-hour trading halt granted to the company on July 16, given shortly after an announcement from the federal government proposing changes to the way work vehicles are taxed.
Following the government’s announcement, the publicly listed salary packaging specialist saw the value of its shares plummet almost 15 per cent.
ASX manager of listings compliance James Gerraty granted the company’s request to extend the trading suspension until July 25, giving it more time to “evaluate the potential impact of the government’s proposed changes”.
McMillan Shakespeare chief financial officer and company secretary, Mark Blackburn, says the company expects to make an announcement regarding where it will go next before the commencement of trading one week from today.
The ALP’s proposed sweeping changes to the tax system on work cars were tabled in order to recoup about half of the estimated $3.8b in budget losses stemming from a shift from a fixed carbon tax to a floating emissions trading scheme.
The changes would see the statutory formula of claiming fringe benefits tax on cars abolished immediately, and back-dated from the time of its introduction. The statutory formula entitles employees with work-provided cars to an assumed deduction of 80 per cent, with no need to keep a log.
These reforms could affect up to a third of the new-car market – about 363,000 vehicles – according to the Federal Chamber of Automotive Industries (FCAI), many of which would be fleet-favoured Australian-made vehicles.
The proposed changes have drawn the ire of local car-makers and full importers alike, as well as novated car lease and salary-packaging providers, and industry advocates. Many affected groups have cited a lack of consultation from government.
“As previously noted, the changes if implemented will have a material impact on the company’s business,” said Mr Blackburn.
“While the changes will require the passing of legislation to become effective, the government’s announcement will still have a short term impact on the company until there is certainty regarding whether the changes will be implemented.
This is because the effective date of the government’s announcement was July 16, and it very significantly impacts the company’s ability to originate novated leases.”The federal opposition proposes a complete removal of any carbon price, meaning it would be faced with a budget shortfall in excess of the ALP’s $3.8 billion. Therefore, any proposed aimed at recouping some of this would logically be a strong chance at passing both houses, irrespective of which party wins the election.
Credit Suisse is reportedly ascribing a "high probability" that these changes are here to stay.
