The trucking industry has been hit hard by the Turnbull government’s tax crackdown.
The move to increase the trucking tax from 7 per cent to 10 per cent has led to a surge in truckers opting to use cheaper Australian services.
What is a truck?
A truck is a vehicle that carries goods between the country and the overseas market.
A vehicle is often used to transport people and cargo from point A to point B. A trucker is an individual who owns a truck, operates the vehicle, and is responsible for all the work that is carried out on the vehicle.
In the US, truckers are required to pay a vehicle tax of 7 per per cent on all vehicles.
This applies to both domestic and international sales, regardless of the location of the business.
The tax on truckers in Australia has not been raised.
How does the tax work?
The truck tax is imposed on the purchase price of a vehicle.
This is a fixed rate, which means that if a vehicle is purchased in the same state as the owner, the tax applies.
This rate is then calculated by dividing the purchase amount by the number of kilometres travelled on the sale.
The difference between the actual price and the tax rate is the truck tax.
In Australia, a vehicle’s tax rate applies to all trucks purchased by the trucker for the previous 12 months.
If a truck is used for more than 12 months, then it becomes an exempt vehicle and must pay tax at a higher rate.
The trucker pays the tax directly to the government, but a separate company, called the transporter, is charged a percentage of the amount of tax.
How much does it cost?
The tax is calculated by taking the total purchase price for a truck (including fuel and insurance), subtracting the tax paid by the transporter.
For example, if a truck costs $2,500, then the tax is $1,500.
Tax is then payable to the transporter in the form of a receipt or cheque.
The receipt or Cheque can be used by the operator to claim tax on the amount paid by a truck for the past 12 months and the vehicle will then be exempt.
The total amount of truck tax that is payable by the vehicle to the tax office is then reported to the truckers employer.
This information is then used by employers to determine the tax liability of the truck driver.
The Tax Office will then send the tax amount to the Australian Taxation Office (ATO) to be collected.
Taxpayers must pay the tax at the rate set out in the tax return.
This may vary depending on where the business is located, the types of businesses involved and the number and types of employees.
Is it possible to avoid truck tax?
The Australian Tax Office is working with truckers to help them minimise their tax burden.
If the tax was not payable, then there are two options for taxpayers who would like to avoid it.
The first is to use the services of a tax adviser, or apply for a refund from the truck owners bank account.
Alternatively, you can use a business loan from a tax specialist.
The second option is to apply to the Federal Government to request that truckers pay the truck levy directly to them.
This will avoid truck taxes for the next 12 months until the tax comes back.
Tax advice and resources