Archive for the 'Carbon Emissions' Category

One million trees planted on behalf of our leasing customers!

At Smartgroup we’re committed to sustainability and doing what we can for our environment, so back in 2008 we joined forces with Greenfleet and set up our carbon offset program ‘Purple meets green’.

Today, over 95% of our leasing customers offset their carbon emissions through a fortnightly donation to Greenfleet, who then plant 16 native trees per customer each year to offset their annual emissions.

This month we celebrated a milestone in our partnership as we planted our one millionth tree (that’s five times the size of Centennial Park in Sydney!) A team from our Sydney office took their volunteering day and headed to the Mt Carmel Retreat Centre to plant our latest batch of native seedlings – here’s how it went:

Voluntary offsetting of your novated lease carbon emissions

As many of our novated lease customers will know, Smartsalary partnered with Greenfleet just over a couple of years ago to create Purple Meets Green – a program that helps offset carbon emissions generated by vehicles leased through Smartleasing.

Through the simple act of making a small pre-tax donation each month, our novated lease customers help Greenfleet work towards planting native trees in areas that need regeneration. In fact, for every $3 donated by our leasing customers, Greenfleet plants 1 native tree – which will reduce their carbon emissions by an average of 5.6 tonnes a year!

We were recently thrilled to find out that after 2 years of working with Greenfleet, we are now their #1 supporter! With our customers having donated over half a million dollars towards the program, they’ve been able to plant 157,699 trees on our behalf.

The trees that are planted not only help reduce our carbon footprint – they also create natural habitats for Australian wildlife and improve water quality by reducing soil erosion and salinity.

So thanks to our customers who support the Purple Meets Green program, we’ve been able to play a small part in minimising the damage caused by carbon emissions to the environment.

Leave a comment here.

Another round of FBT changes?

Hi Readers – Simon Ellis here, taking over Deven’s blog to talk taxation.

It seems like only yesterday I was writing to advise you of an upcoming tax review with the potential to impact your salary packaging. Back then it was called “Henry” after the surname of its Treasury co-ordinator, yet here we are again not two years later discussing its far less creatively named progeny – the National Tax Forum.

It should really have been called Son of Henry, although in a way I’m glad we’re no longer giving “people” names to our legislative reviews. After all, putting a human face on tax reform is just false advertising.

Anyway, those of you who were paying attention last time would have noticed that the Government’s formal response to the 140 (or so) recommendations in the Henry review was a little on the thin side. Of all the recommendations made only a handful were adopted as policy (including the flat 20% rate for salary packaged cars) leaving the majority to languish in the “maybe one day” pile with some mouldy old Ralph and Asprey ideas.

But if you thought you’d seen the last of those recommendations then it’s now time to think again. Son of Henry is here to re-float ideas from the original Henry review, including:

  • a complete revision of benefit taxation in Australia: simplifying benefit valuation rules and moving tax obligations from employers to employees
  • “green benefits”: considering ways to encourage employers to ‘green’ their workforce by offering concessions for environmentally responsible benefits like public transport and low-emission vehicles; and
  • abolition of the tax-free cap for public hospitals and charities in favour of direct grants and other subsidies (even though the government promised not to implement this recommendation “at any stage” in its initial response).

What does this mean for our customers? Well – nothing at this stage as there’s no guarantee that anything will change in any substantial way.

But it does mean that Smartsalary will dive back into the public policy pool on behalf of salary packaging employees everywhere, and use whatever influence we have to protect your tax savings and lobby for new ones.

So while we’re in those murky waters – is there anything you’d like us to mention on your behalf?

Leave a comment here.

Changes to novated leasing – draft legislation released

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January 2012 update: For the latest information about the 2011/12 novated lease budget changes, please click here.

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Simon Ellis here, blogging again on Deven’s request in relation to the recent changes to the rules around how car benefits are valued for salary packaging purposes.

Deven has asked me to update our readers as the draft legislation for the new car fringe benefit rules has now been released by Treasury as Taxation Laws Amendment (2011 Measures No. 5) Bill 2011. This release clarifies a number of the outstanding issues lingering from the budget announcements, although there are still some areas of confusion and it’s always worth noting that the final legislation has not yet been passed by Parliament.

Nonetheless there’s good information in this latest release that our readers and customers should find helpful. But before I get into detail I thought I’d first provide a brief recap of the 2011 Budget changes:

  • car fringe benefits will no longer be ‘valued’ for tax purposes using a sliding scale of rates based on kilometres travelled: all cars will be valued at a flat 20% rate
  • The new rules will not apply to employees whose packaged vehicle was set up prior to the budget announcement on 10 May 2011, and
  • Transitional rates will apply to employees who commence packaging after the budget announcement and who travel in excess of 25,000km per year

What we now know

The draft legislation and the explanatory memorandum that accompanies it have clarified the following:

  • The trigger point for application of the new rules is likely to be the time of novation, i.e. the date the vehicle novation agreement becomes binding on all parties. For example, a car packaged under a novation agreement signed before 7:30pm on Tuesday 10 May 2011 will be packaged under the old rules, whereas cars novated after that time must be packaged under the new/transitional rules;
  • Anyone currently packaging a car under the old rules will continue to use those rules until their novation contract with their current employer ends. This means that changing employers or going on extended leave will generally trigger application of the new rules (as these events involve the cessation of a novation agreement);
  • Employees currently salary packaging a car at the 26% rate will not be able to access the new 20% rate until the end of their novation agreement. Artificial attempts to end a novation early solely in order to access the new 20% rate are likely to be pursued by the ATO as tax avoidance; and
  • If a ‘trigger’ occurs during an FBT year such that a car moves from the old to the new rules (but stays under the same employer) the old rules will continue to apply for the remainder of that FBT year and the new rules will only apply from 1 April in the subsequent year.

There are still a few unresolved issues, such as confirmation from the ATO on when it considers a novation agreement ‘binding’, nonetheless the release of the draft legislation has allowed Smartsalary to start redesigning our packaging systems, rules and processes to accommodate the new rules.

If you’ve got any burning questions, feel free to ask them in the comments section and we’ll do our best to answer. Otherwise call us on 1300 476 278 and talk with one of our friendly leasing experts.

Leave a comment here.

Video update: 2011 Federal Budget

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January 2012 update: For the latest information about the 2011/12 novated lease budget changes, please click here.

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Earlier today we filmed an interview with Simon Ellis, our Senior Tax Advisor. In this video, he outlines his thoughts on the recently announced changes in the 2011 Federal Budget and how they will impact salary packaging. A written summary can also be found here.

Changes to Novated Leasing – 2011 Federal budget

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January 2012 update: For the latest information about the 2011/12 novated lease budget changes, please click here.

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The 2011-12 Federal Budget has been handed down and there are important changes in play for vehicle packaging. Simon Ellis, our Senior Tax Advisor, gives us a run-down of these changes and how they are likely to impact those of you salary packaging a novated car lease or thinking about packaging one.

Following a significant amount of media coverage last week we were expecting changes to the way new leases are taxed for Fringe Benefit Tax (FBT) purposes. And in fact, that’s what we got.

From tonight all new novated leases will be subject to a new FBT valuation regime that will, after four years, result in all salary packaged cars being valued for tax purposes at 20% of their initial cost regardless of the kilometres they travel. These changes are consistent with the Henry Tax Review recommendations presented in May last year. For more information have a look at Smartsalary’s coverage of last year’s Henry Tax Review.

The budget papers are a bit light on detail, but the Treasurer’s home page does provide detailed information on the implementation of the new rules.

The key points from the perspective of employers and employees are as follows:

  • The new rules do not apply to existing novated leases. All current packaging arrangements remain unchanged.
  • New leases will, from today, use a transitional set of statutory rates that will gradually phase out the 7% and 11% valuation options over the next four years (see the table in the Treasury link above). This means that the savings achievable for employees driving more than 25,000 kilometres per annum will be lower and that, at least for the time being, some employees will still need to meet kilometre targets in order to get the most out of their packaging arrangements.
  • The new rules will now open up novated car leasing to employees currently not packaging a vehicle and driving less than 15,000km per year. Previously employees driving less than 15,000 kms were required to value their cars for tax purposes using the 26% rate, but now the 20% rate is immediately available. Since the average Australian car travels less than 15,000km per annum it’s likely that a significant number of employees who previously couldn’t achieve good savings will now benefit from a salary packaged car.

A number of questions remain unanswered- for example, “will those currently packaging a car on a 26% rate be locked in to that rate for the term of their lease or will they be able to elect to apply the new transitional rates? and “how will these rules apply to employees who are currently mid-settlement on a novated lease?” At the moment Smartsalary is investigating these and other issues. We’ll let you know more as we find out.

We’ll be issuing more detailed instructions to our customers over the coming days, and will be posting a video presentation here shortly explaining our views in more depth. Stay tuned.

Well that’s a lot to consider and I’m sure there will be plenty more to come. In the meantime feel free to provide your thoughts on this change in the comments section.

Over 78,000 trees planted thanks to our novated leasing customers

Australia’s carbon emissions have been the focus of much debate recently. At Smartsalary, we take the environmental impact of car travel very seriously – especially given that novated car leases are amongst our most popular products.

We recognise that it is our responsibility to take action against that impact. For some time now, we’ve been partnered with not-for-profit organisation Greenfleet to help offset carbon emissions generated by vehicles leased through Smartsalary.

Our carbon offset program is called Purple meets Green. To all of our customers involved with the program, we’d like to say thank you – to date, your donations have allowed Greenfleet to allocate 78,866 trees to areas in need of regeneration around Australia.

How will these trees help the environment?

Since 1997, Greenfleet has planted almost 7 million native trees in Australia. Today, the resulting forests are helping to restore habitat for wildlife, reduce soil erosion and salinity, and improve water quality.

Below is an example of a Greenfleet biodiverse forest at Battery Creek, VIC.

Again, we send sincere thanks to our customers for their commitment to helping the environment, and hope many more trees are planted on your behalf.

Leave a comment here.

Deven Billimoria
Chief Executive Officer

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