The Australian Fleet Lessors Association (AFLA) has released sample data from its members about the impact of the changes to the fringe benefits tax (FBT) announced by the Australian federal government on July 16.
Sample data for AFLA Members revealed total vehicle orders placed in the second half of July were 20 percent lower than in the first half. More recent data shows that this downturn in vehicle orders has significantly worsened. The downward trend has not been arrested, but has accelerated; orders placed in the first half of August were 37percent down on those in the first half of July. Orders for Australian manufactured vehicles were down by 35 percent, other vehicles by 38 percent.
According to AFLA, the reduction in business is entirely attributable to the removal of the statutory formula option. It has had a serious immediate impact on business in this industry sector with devastating consequences for those sufferingloss of employment. Further job losses are inevitable if this measure proceeds.
Further the Assocation said, that its data shows that the average cost of the funded portfolio is around $36,000 per vehicle, less than 4 percent are above the luxury car limit, and 50 percent are Ford, Holden or Toyota manufactured products. Vehicles used as tools of trade make up around three-quarters of the fleet and are predominantly Australian manufactured vehicles.
AFLA said that it believes the currently legislated FBT regime facilitates sensible compliance arrangements. For AFLA Members, less than 20% of tool-of-trade vehicles use the operating cost method to determine their FBT liability, but will be required to move to this method, with a significant increase in cost of compliance resulting from the need to account for every vehicle expense on a per vehicle basis.
AFLA is the association of fleet leasing companies in Australia. Members have a total portfolio in excess of 550,000 funded and/or managed vehicles.