Home > Bowen defends changes to FBT amid criticism

Bowen defends changes to FBT amid criticism

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Federal Treasurer Chris Bowen says that the government’s decision to change the way the fringe benefits tax (FBT) is calculated for cars is justified and that drivers who genuinely use their vehicles for business purposes will still receive a concession.

AAP reports that Bowen’s defence of the amendment to the FBT follows some sustained criticism from the Federal Opposition, business groups, motoring clubs and others.

According to shadow treasurer Joe Hockey, the change “.....is going to be like a baseball bat to the motor vehicle industry in Australia."

And Australian Automobile Association Executive Director Andrew McKellar said in a statement, "Motorists already pay their fair share to the budget bottom line and should not be targeted to help minimise the budget impact of other policy decisions." 

However Bowen said that the FBT concession on lease and salary-sacrifice arrangements will not be cut.

"If you are using your motor vehicle for business use, you deserve the reduction, you'll get the reduction, you'll keep the reduction," he said.

He clarified the changes that the government is proposing, saying that drivers who want to receive the concession will have to clarify that their vehicles are being used for business purposes. They will have to do this by filling in a log book or using a mobile phone app to track their percentage of business use over three months every five years.

The amendment to the FBT follows Prime Minister Kevin Rudd’s announced that the change to a market-based ETS will occur on July 1, 2014.

Given that the current carbon price of $25.40 per tonne is expected to initially drop to about $6 per tonne, the move will cost the budget about $3.8 billion over the next four years.

To pay for this shortfall, one of the measures the government will take is to make FBT changes relating to salary-sacrifice and employer-provided motor vehicles. This step will be worth about $1.8 billion.

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