The information below is provided by TR Fleet following changes announced in the 2015 Federal Budget.
Federal Budget Changes*:
The 2015/16 Federal budget announcement on the 12 May 2015 includes a number of proposed changes to the taxation of motor vehicles as they relate to the use of privately owned vehicles for business use (Grey Fleet).
Currently there are four methods of payment for the use of privately owned vehicles for business use. The 2015 Budget proposes in the 2015/16 income year that two methods are being removed and one is extensively modified:
Current Method 1: Cents per kilometre:
Grey Fleet drivers can claim a maximum of 5,000 business kilometres per year.
Engine Capacity Cents-per-kilometre
1.6 litre: 65 cents
1.601-2.6 litre: 76 cents
2.601 litre: 77 cents
Proposed Change in 2015 Budget:
Removal of the 76 cents and 77 cents options. A Grey Fleet driver can claim a maximum of 5,000 business kilometres per year. For distances greater than 5,000 the driver will be required use to the logbook method.
Engine Capacity Cents-per-kilometre:
All Types (incl. EVs): 66 cents
Method 2: 12% of Original Value
Proposed Change in 2015 Budget:
This option will be removed.
Method 3: One-third of Actual Expenses
Proposed Change in 2015 Budget:
This option will be removed.
Method 4: Logbook
The Grey Fleet driver’s claim is based on the business-use percentage of the expenses for their vehicle . Business use percentage is the kilometres travelled in the car for work during the year divided by the total yearly kilometres travelled. Grey Fleet drivers using this method for the first time must cover at least 12 continuous weeks of Logbook registered activity. Logbooks are valid for five years if there are no significant changes in the usage pattern to the Grey Fleet vehicle.
Proposed Change in 2015 Budget:
This system will be retained.
Further information can be found at:
Taxation Ruling TR 95/34 External Link- Income tax: employees carrying out itinerant work deductions, allowances and reimbursements for transport expenses. Deduction for transport between workplaces. Guide to depreciating assets 2014 (NAT 1996) for decline in value of a car.
Possible Implications:
A possible impact of these changes is that staff, who had previously been claiming business use of either 76 cents or 77 cents on their Grey Fleet vehicle via Method 1 (above) are now likely to either:
- Investigate the financial viability of opting-in to their Employer’s Fleet Policy in instances where the cent-per-klm rate is more generous than the 66c prescribed above
Or
- Move to the log-book method as per Method 4 (above)
Should Grey Fleet drivers now seek to opt-in to your Fleet Policy then we would encourage organisations to ensure your Fleet Policy or Procedures:
- Are up-to-date and available for staff
- Prescribe the mechanisms via which staff can claim cents-per-kilometre amounts for Grey Fleet vehicles
- Cover all aspects of managing a Grey Fleet – including Compliance and Duty of Care
TR Fleet would be only too happy to assist with any further questions you might have in relation to this matter.
* nothing contained in this post constitutes financial advice and TR Fleet recommends that organisations seek their own independent financial advice regarding the impact of the 2015 Federal Budget.
