Premier & Cabinet

Type:
Department of Premier and Cabinet Circular
Identifier:
C1996-12
Status:
Archived

C1996-12 Senior Executive Service - Changes to Motor Vehicle Policy-Wholesale Sales Tax and Leasing

Detailed Outline

As you will be aware, the Commonwealth Government has removed the exemption from wholesale sales tax in respect of general purpose road vehicles purchased by governments or government controlled entities where the vehicles are wholly or partly for private use as part of an employee's remuneration. The decision is effective on and from 11 June 1996.

Vehicles affected include those which are capable of being used in salary packaging arrangements and will also cover utilities and 4 wheel drive vehicles as well as passenger motor vehicles. As a consequence, vehicles purchased for use by chief or senior executive officers as part of their executive packaging arrangements will attract wholesale sales tax. This will be applied to any vehicle purchased on or after 11 June 1996. The purchase of a vehicle is deemed to have taken place when it passes from the wholesaler to the retailer.

The impact of sales tax is to be met by SES officers from their remuneration package, i.e. it is not to be shared by the Agency. This is because the sales tax results only from the vehicle being used in a private capacity. Unlike fringe benefits tax (FBT), however, sales tax is being included in the purchase price of the vehicle and will be dealt with differently to satisfy Government requirements.

The lease rate for a business/private vehicle will be based on the rate applicable to a 100% private vehicle with the figure being adjusted by the cost to the Agency for the business component. The business component will be exclusive of sales tax. Examples are shown on the attached schedule.

The normal procedure will continue to apply for FBT.

As sales tax is now paid on private use vehicles, chief and senior executive officers may enter into a leasing arrangement for a vehicle for any period between one and two years with the maximum, permissible distance being 50,000klm. This takes into account the industry standard warranty now offered on new cars.

REVIEW OF LEASE RATES

A review of lease rates has also been completed by Macquarie Bank, Commonwealth Bank, NSW Treasury, Tcorp and StateFleet Services. As from 1 July 1996 the base lease rate has dropped by 1% to 9%. This, combined with an increase in residuals across all vehicle categories has resulted in lower lease rates. The new rates will apply to all vehicles purchased on or after 1 July 1996. Because of differing residuals, rates might vary considerably between the various makes and models. The lease rates offered by StateFleet Services may only be applied to vehicles available in government contract.

NOVATED LEASES FOR 100% PRIVATE VEHICLES

Effective from the date of this Circular, Chief Executive Officer's may implement a system of novated leases for 100% private executive vehicles. There will be no restriction on the make or model of vehicle which can be leased on this basis on the clear understanding that all lease and running costs are to be paid from the remuneration package of the SES officer concerned.

SALES TAX RATES

Current sales tax rates are 22% on any amount up to $36,995 (wholesale) and 45% for each dollar in excess of $36,995. The inclusion of sales tax in the purchase price of a vehicle also means that the maximum price which can now, be paid for a vehicle in the CES/SES motor vehicle scheme is $55,134, inclusive of sales tax and accessories.

FBT RATES

Agencies should also be aware that the Australian Taxation Office has advised that the grossed up FBT rate increased to 94.2% effective 1 April 1996.

Agency staff are reminded of the need to keep themselves apprised of changes to the levels of sales and fringe benefits taxes.

It would be appreciated if you would ensure that the above information is made available to all appropriate staff in your administration.

R. B. Wilkins
Acting Director-General

Table for inclusion in Senior Executive Service Circular No 96

Ford Fairmont Camry CSX Corolla CSX

Vehicle Size Large Medium Small

Vehicle Use Pool SES Pool SES Pool SES

Sales Tax No Yes No Yes No Yes

Capital Cost $23,840 $29,085* $21,276 $25,957 $19,862 $24,232

Residual 115.00% 110.00% 105.00% 100.00% 100.00% 95.00%

Monthly Lease Fee

24 month lease $40 $104 $123 $200 $156 $236

SES salary package charge to reflect Officer bearing the full cost of Sales Tax

1. Usage - 100% private
SES Officer pays $104 $200 $236

2. Usage - 70% private, 30% business
Agency pays 30% of ex tax rental, $40 X .3 $12 $123 X .3 $37 $156 X .3 $47
SES Officer pays the balance $92 $163 $189

Overview

Compliance

Not Mandatory

AR Details

Date Issued
Aug 19, 1996
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