Coalition formally dumps FBT changes

THE federal treasurer Joe Hockey today confirmed the Abbott government’s pre-election pledge to dump the previous Labor government’s fringe benefit tax (FBT) changes on company and salary-sacrificed cars – and not a minute too soon, according to the motor industry.

The Federal Chamber of Automotive Industries (FCAI) says confusion around the FBT proposal might explain a 10.1 per cent decline in business vehicle purchases last month.

FCAI chief executive Tony Weber said he wanted the public to know that the FBT system had reverted to the status quo that existed before July 16.

“The October data leads us to conclude there is still confusion in the market following the previous government’s FBT proposal,” he said.

“It is hard to have any other explanation for the 3.1 per cent fall in the automotive market, particularly given a number of positive economic indicators across the broader economy in recent weeks.”

Announcing the switch back to the previous FBT system, Mr Hockey described the Labor measure as a $1.8 billion FBT hit on the car industry.

“During the 2013 election the Coalition pledged not to continue with Labor's $1.8 billion Fringe Benefits Tax change that would make it harder for people to have a company or salary sacrificed vehicle,” he said.

“The Coalition Government today confirms it will not proceed with this measure.”

As reported, the Labor government removed the 20 per cent FBT statutory formula method for salary-sacrificed and employer-provided vehicles in a bid to save taxpayers up to $1.8 billion and help pay for an early move to an emissions trading scheme.