Trucking and Transport Issues
Over the years a number of States have reformed their public transport regulations leading to changes to the traditional financing and security arrangements for taxi, bus and coach operators licensed under the new regulations and to the level of vehicle registration fees. AELA has continued to work with the respective industries and governments to smooth the operation of the new rules as they affect financing. In relation to road freight trucking operators vehicle registration fees AELA, while appreciating the governments’ approach to cost recovery on a ‘user pays’ basis, notes the wider benefit and externalities of this infrastructure investment for the entire economy. Moreover as the impact of the changes on the economics of individual operator’s activities, existing contracts and commitments can be considerable; we would urge that the implementation of these policies take into account such financial consequences.
A particular issue impacting on the trucking industry is the Commissioner of Taxation’s review of effective life determinations, which had the potential to substantially reduce capital allowances in this sector. AELA worked successfully with trucking associations to ameliorate the impact of these changes.
As noted earlier in this Review, the Government announced in September 2004 that it would introduce legislation to provide statutory effective life caps for the depreciation of transport assets, to be 7.5 years for light commercials, trucks and buses, and 10 years for truck trailers. The statutory caps apply to purchases made on or after 1 January 2005, and provide significantly shorter effective lives than those decided by the Commissioner. Diminishing value depreciation for assets with a statutory cap of 7.5 years are 26.7 percent per annum compared to 13.3 percent under the Commissioner’s determination. Unfortunately the Tax Office did not accept that the statutory cap effective lives could be used for determining safe harbour residual values in leases, and this has caused significant disruption in this market segment.