High income threshold; how to value car allowances

How to value a motor vehicle allowance for the purposes of the high income threshold

“It is noted that prior to the Full Bench decision in Sam Technology there had been a disparity of approaches in decisions of individual members of the Commission relevant to the value, if any, a car allowance should have towards an applicant’s earnings for the purposes of s.332 of the Act. The decision in Sam Technology was issued shortly after the Commissioner issued her Decision. Accordingly, the Commissioner did not have the benefit of Sam Technology and we therefore imply no criticism of the Commissioner for not having regard to that decision.

We consider, however, that regard should have been had by the Commissioner to the Full Bench decision in Kunbarllanjnja Community Government Council v Fewings 9 (Fewings), where it was held:

“In our view the most appropriate method of calculating the value of the motor vehicle component of an applicant’s remuneration is as follows:

  1. Determine the annual distance travelled by the vehicle in question.
  2. Determine the percentage of the annual distance travelled which was for the applicant’s private purposes.
  3. Multiply the figures from 1. and 2. This provides the annual distance travelled for private purposes.
  4. Estimate the cost per kilometre for a vehicle of the type used. This information can be obtained from the RACV, NRMA or like motoring organisations.
  5. Multiply the annual distance travelled for private purposes by the estimated cost per kilometre. The result is the value of the motor vehicle component of the applicant’s remuneration.”

The decision in Sam Technology has given further precision as to the examination required in Fewings, but is based on the same principle of examining the business versus private use of the vehicle. In failing to have regard to those matters and without relevant examination of the same, we are of the view that the Commissioner erred in finding that all of the car allowance paid to Mr Monteiro should have been treated as ‘earnings’ for the purpose of s.332(1) of the Act.”

Monteiro v Valco Group Australia Pty Ltd T/A Valco Group Australia – [2018] FWCFB 3280 – 20 June 2018 – Catanzariti VP, Hamberger SDP and Hunt C

++ The decision in Sam’s case can be found at Sam Technology Engineers Pty Ltd v Bernadou [2018] FWCFB 1767