The Gillard government will remove the FBT rule, which favours those who drive company cars for private use when they clock up more travel annually, Fairfax Media reports.
The Henry tax review had recommended that the different tax rates currently applying to half a million cars bought on salary sacrifice be replaced with a single 20 per cent FBT rate.
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That would mean all taxpayers get the same level of concession regardless of the annual distance travelled, and it would end the drive to rack up the kilometres to obtain a lower FBT rate.
Greens leader Bob Brown last month released Treasury figures showing the government could save almost $1 billion over five years if it slashed the FBT concession.
