Tax

“We’re looking at the real possibility of retrenchments”: Small business owner decimated by FBT changes speaks out

Patrick Stafford /

Salary packaging veteran NLC shocked the industry yesterday when director Danny Wilson said the company would be forced to fire 74 of its 147 workers – but it’s not the only business hurting from the government’s changes to fringe benefits tax.

Eric Cain, the managing director and chief executive of salary packaging company Fleet Network in Western Australia, told SmartCompany this morning 20 of his 23 staff have been placed on annual leave, with the real possibility of retrenchments.

“We’re looking at that as a real possibility over the next week,” he says.

The government announced earlier this week that FBT provisions would be changed in order to save $1.8 billion. Now, employees using cars for salary sacrificing schemes need to keep detailed log books instead of using the “statutory method”.

The government says this will stomp out rorts with businesses using luxury cars for personal use. But business owners such as Eric Cain deny this, saying most cars are being used by average employees.

“I think it’s mind-blowing they can make a decision and then say it’s effective from that day, without any warning at all,” he says.

“The government has tried to say this change is only going to affect people earning over $100,000, but 95% of our clients are from the public sector, policeman, teachers and nurses.

“It’s just not what they say it is. It’s everyday people, and most of them are average employees.”

Cain’s announcement comes just a day after Danny Wilson said 74 of his own staff would see their jobs come to an end.

“Unfortunately this (Thursday) afternoon we have had to tell our staff we would be making about half our staff redundant,” Wilson told the ABC.

“Many of our staff have worked with us for a long time. I’ve got people that I work alongside of that are not only colleagues, but are friends, and I won’t be working alongside of them on Monday.”

Leigh Penberthy, the president of the Australian Salary Packaging Industry Association, told SmartCompany the government is misled – most workers aren’t driving luxury vehicles.

“Our book shows that 5% of the portfolio is made up of luxury cars, such as BMWs or Mercedes vehicles,” he says. “This impacts people who are average wage workers.”

Unfortunately, Penberthy says, at this point it seems unlikely the decision will be reserved. For now, however, the industry will continue to lobby for change.

“This is going to have flow-on effects for small businesses of all sizes,” he says.

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Patrick Stafford

Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.

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