Premier & Cabinet

Type:
Department of Premier and Cabinet Circular
Identifier:
C1994-22
Status:
Archived

C1994-22 Senior Executive Service - Motor Vehicle Leasing and Running Costs

Detailed Outline

In 1993, a new operating lease 1 arrangement with Macquarie Bank Limited was introduced for the acquisition of ' passenger and light commercial vehicles leased by agencies through State Fleet Services (SFS). Experience over the last twelve months has shown that a major effect of the change has been a general reduction in the lease fee of motor vehicles.

The essential difference between the Macquarie Bank arrangement and that which previously applied is that the projected profit or loss on resale of a vehicle is built into the lease payments over' the life of the vehicle. Under the previous arrangement, the loss or profit on resale was adjusted at the point of sale as a lump sum payment.

As a consequence and under the concept of 'user pays' it has been decided that the cost of motor vehicles taken under SES contracts should be based on any profit or loss on the resale of vehicles being passed on to the user of the vehicle, including SES officers. To achieve this, SFS have determined the average anticipated residual of vehicles and this is factored into the formula for determining the lease rate. The residual rates will be reviewed annually by SFS.

Therefore, effective from 1 October 1994, all new arrangements entered into by SES officers to lease motor vehicles as part of their remuneration packages are to be costed to include:

The standard operating lease offered by State Fleet Services for the particular type of vehicle concerned, including an administrative charge equivalent to that set by SFS (currently $15 per month)- the lease fee remains unchanged for the official life of the vehicle;

The system caters for "main stream" 4WI) vehicles such as Mitsubishi Pajero, Nissan Patrol and Toyota Lancicruiser (base type models) although a request for a lease price for any other model may be referred to SFS.

A vehicle may be optioned in accordance with current approved practice, but this must be done prior to delivery to ensure that the total invoice cost is available for calculation of the lease fee.

Only the first year of registration or part thereof up to the 30 June after date of purchase is included in the lease fee. The cost of any renewal of registration during the official life of the vehicle must be passed on to the SES officer.

The current maximum wholesale cost of vehicles which can be accommodated under the new system is $51,271.

Annual running costs, insurance and other costs determined by the Premier's Department fronf time to time;

The annual review of standing and running costs for motor vehicles has also been completed and the charges -;hown on the attached schedule W are to be applied effective from 1 October 1994.

Parking levy, where applicable;

Fringe benefits tax.

Examples of the impact of the change to the leasing arrangement on the costing of a range of vehicles is shown on the attached schedule W. For convenience, it is assumed that the standing and running costs are those which apply from 1 October 1994, with only the impact of the changes to the basic lease cost being shown.

For consistency, this policy is to apply to officers of the Senior Executive Service in all government bodies (including non budget sector agencies) notwithstanding that some agencies may buy vehicles from their own funds and not lease through State Fleet Services. SFS are able to quote lease rates for any type of vehicle in Government contract and these should be the rates applied by all agencies when determining SES motor vehicle leasing arrangements. SFS may be contacted on (02) 339 7426 - fax (02) 339 7186. Agencies or SES officers contacting SFS for quotations will greatly assist if they are specific about their requirements and keep the number of vehicles to be quoted on at a reasonable level.

CHANGES TO SALES TAX RATES

It is understood that a number of Agencies are not aware of the increased motor vehicle sales tax rates which were introduced by the Federal Government in August 1993. The new rates, effective from 18 August, 1993, are:

16% for sedans with wholesale cost of up to $34,403; 45% for sedans with wholesale cost greater than $34,403; 21% for commercial vehicles, including 4 wheel drive vehicles.

These rates should be used by all Agencies when calculating the appropriate FBT costing for SES vehicles. Any future changes to sales tax on motor vehicles introduced by the Federal Government (or to the wholesale rates which are reviewed on 1 July each year by the Taxation Office) should also be automatically applied by Agencies.

Information on sales tax can be obtained at any time from the Australian Taxation Office on their Toll Free number, (Sydney) 13 2866.

A number of Agencies have also raised the question of whether the current policy of applying a sales tax rate to the contract price of vehicles to determine the basis for calculating F.B.T. impact is appropriate, as the contract price is not necessarily the wholesale price. This matter is being investigated with the Commissioner of Taxation and further advice ' will be issued shortly. In the meantime, the current procedures should continue.'

ROADSIDE ASSISTANCE/NRMA MEMBERSHIP

A number of motor vehicle manufacturers are offering roadside assistance for some of their vehicles. For the period any such program is available, it will not be necessary for the vehicle to be registered as part of the corporate membership of the NIZMA and consequently the SES officer concerned has no liability to pay the NIZMA subscription.

It would be appreciated if you would bring tl-ds information to the attention of all SES officers as well as those responsible for SES matters within your administration.

C Gellatly
Director General

Overview

Compliance

Not Mandatory

AR Details

Date Issued
Oct 7, 1994
Review Date
Jun 13, 2024
Replaces
Replaced By

Contacts

Contact
Contact us
Phone
02 9228 5555
Publishing Entity
Department of Premier and Cabinet
Issuing Entity
Department of Premier and Cabinet