The new fringe benefits tax year starts on 1 April 2016. The ATO have recently announced changes to tax implications for car allowances paid to sales professionals and other employees. The ATO says, “Changes to car allowances mean if you are paying your employees a car allowance in excess of 66c per kilometre, you need to withhold tax on the amount you pay over 66c. If you haven’t been doing this since July 2015, you should begin to withhold tax on the amount you pay over 66c and advise your employees.”
Matthew Hunt, Client Director at SiDCOR chartered accountants says “This change will put a greater onus on employers getting a record of the employees motor vehicle log book, or at the very least an indication from the employee on an at least quarterly basis as to the work related kilometres being travelled, so the employer can satisfy themselves that they are meeting their PAYG withholding tax obligations.”
By our calculations, the new rule may affect employers and sales professionals who: Pay or receive a $15,000 car allowance who do less than 22,727 km per year, or Pay or receive a $18,000 car allowance who do less than 27,272 km per year, or Pay or receive a $20,000 car allowance who do less than 30,303 km per year, or Pay or receive a $25,000 car allowance who do less than 37,878 km per year.
We are not qualified to give financial or tax advise. Further advise should be sought from a qualified accountant. Speak with Matt Hunt from SiDCOR chartered accountants or for more information from the ATO, click here.
We’ve published this as we’ve recently discovered some employers have not yet made the necessary changes in their payroll. We hope this information helps.
To your sales success!
