• Section 1 - Purpose and Context
• Choice of Vehicles
• Insurance
• Access to Vehicles Whilst on Leave
• Costings
• Alternatives to Private/Business or Wholly Private Vehicles
• Section 2 - Definitions
• Section 3 - Policy Statement
• Part A - Staff Eligibility
• Part B - Business/Private vs. Wholly Private
• Part C - Basis of Costing of Business/Private Use
• Part D - Costing of Wholly Private Use
• Part E - Insurance Arrangements
• Part F - Choice of Motor Vehicles
• Part G - Optional Extras
• Part H - Equity in Vehicles
• Part I - Control of Vehicles
• Part J - Access to Vehicles Whilst on Leave
• Part K - Procedure to Initially Access a University Vehicle Under Salary Sacrifice
• Part L - Costing of Benefit
• Part M - Abnormal wear and tear and/or damage to a University business/private vehicle
• Part N - Changes in Policy
• Section 4 - Procedures
• Section 5 - Guidelines

Section 1 - Purpose and Context

(1) (Note: This policy relates to employees who are eligible for a salary sacrifice vehicle because of their contractual terms of employment and the corresponding salary sacrificing arrangements. It does not apply to novated-lease arrangements which are dealt with by Human Resources.)

(2) The Salary Sacrifice (Vehicles) Policy is the result of an iterative process that has involved research and full discussion of the issues. The policy covers both business/private and wholly private use. The operating costs of packaged business/private use vehicles are apportioned on a 50/50 basis between business and private use. This proposed arrangement is more generous than that offered at some other Australian Universities and reflects not only the proportion of the year spent at work, but also the multi-campus nature of the University of Western Sydney and the expectation that senior staff members travel to campuses other than their "base" campus for business purposes.

(3) Operating costs and FBT are based on an assumed 40,000 km total travel profile. Costings for wholly private use vehicles are based on an assumed 20,000 km travel profile with retrospective variations to FBT and fuel costs where the distance varies by + 5,000 km per annum.

Choice of Vehicles

(4) The policy also covers choice of motor vehicles, allowable optional extras and issues relating to control and access. The University will attempt to eliminate vehicles which do not maintain their value, and vehicles which have not been popular with staff in the past. Staff will, however, not be totally limited to the choice of vehicles listed in the schedule of vehicles and can make special requests for vehicles that are not listed. These requests will be considered by the Director Finance, who will make a recommendation regarding the request and the salary sacrifice required, to the Deputy Vice-Chancellor Corporate Strategy and Services for approval.

Insurance

(5) All UWS vehicles are comprehensively insured under a UWS umbrella motor vehicle policy. In the event of an accident involving the staff member as driver, the University does not recover the base $1000 excess from the staff member. The package value calculations cover the base level excess. Where however, the vehicle is being driven by a member of the staff member's family at the time of the accident, additional excess deduction levels may apply. Where an additional excess is applied by the insurer, this will be charged to, and recovered from, the staff member. The additional excesses are linked to driver age and experience and are shown in Part E of this policy.

Access to Vehicles Whilst on Leave

(6) It will be noted that the policy outlines access to private/business vehicles during annual leave. The maximum six weeks per annum is based on the fact that staff have a four week entitlement per year during which time they should be able to access the vehicle and an extra two weeks has been added to cover situations where carry-over of leave from the prior year occurs.

(7) If a staff member wishes to use the vehicle for more than the maximum leave time specified in the policy, the wholly private charge rate would apply. The additional amount would be met through the payroll system.

Costings

(8) The basis of calculation of the attached policy is that the University will charge 50% of the actual operating costs and 100% of the assessed, average capital cost components. A cost comparison between the pre-2001 costing and the new policy shows:

1. Calculation of capital cost (upon which FBT, interest and depreciation is based) now involves GST. The NSW Government (Premier's Circular) has directed Government Departments and Agencies to include GST in costings of packaged vehicles;
2. FBT cost - basis of calculation has not changed;
3. Operating costs (petrol, servicing, registration, insurance) now costed on a 50/50 basis;
4. Interest on capital - basis for calculation is unchanged, but the rate has been increased from 5.5% to 6% in line with the actual movement in the UWS short term interest earning rate. This is more favourable than bank lending rates for motor vehicles;
5. Depreciation/Loss on Disposal - this is a new cost element introduced to reflect a change in actual change-over costs. Prior to GST, UWS was changing-over well kept vehicles with 40,000 km or thereabouts at no loss on purchase price. The University did not pay sales tax at purchase and when we sold/traded-in, we often received what we paid. With the introduction of GST, the second hand car market deteriorated and our sales/trade-ins now involve GST. We must pay 10% of the trade-in/sale to the Tax Office as GST. We now incur a loss (depreciation) on motor vehicles. This is a real cost to UWS and must be passed on to users. Depreciation at 5% p.a. has been included. Over 2 years UWS recovers 10% - about the average loss.
6. Insurance Excess - this is a new cost element which replaces the requirement for the officer to pay any excess in event of an accident. An average has been struck, based on historical information relating to claims, which spreads the risk across all officers with salary packaged cars but eliminates the staff member's obligation to pay the excess if an at fault accident occurs.

(9) The above changes have had a more significant impact on wholly private vehicles, as in these vehicles the staff member pays 100% of operating costs. The Capital cost recovery is the same as applies for business/private vehicles.

Alternatives to Private/Business or Wholly Private Vehicles

(10) The option of a staff member packaging a vehicle at a lower cost as a 'trade-off' for that vehicle's availability in the general pool, when not in use by the staff member, has been abolished. There will, however, be general pool vehicles at each UWS campus for use by staff for business related travel only. These cars may not be taken home except in circumstances approved by the supervisor and may not be used for private purposes

(11) The purpose of this policy is to define and regulate the basis under which staff can access University vehicles for private use purposes.

Section 2 - Definitions

(12) Nil.

Section 3 - Policy Statement

Part A - Staff Eligibility

(13) Those University employees eligible to obtain this benefit under the Salary Sacrifice (Vehicles) Policy are:

1. Vice-Chancellor, Deputy Vice-Chancellors, Pro Vice-Chancellors, Executive Deans and Directors;
2. Senior Staff as determined by the University;
3. Heads of School;
4. A small number of University staff are entitled to private access to Motor Vehicles as a condition of appointment. These arrangements pre date this Policy and the conditions of access in such cases are based on the employment contract terms.
5. A small number of Office of Capital Works and Facilities Project Managers and technical staff on a "Tool of Trade" basis only when deemed an absolute necessity for the effective performance of their duties by the Director Capital Works and Facilities. The business/ private use of a "Tool of Trade" vehicle by a nominated Office of Capital Works and Facilities staff member under this provision is restricted to travel within New South Wales only.

(14) Note: This Policy does not apply to senior staff of related entities as each entity determines its own conditions for private access to entity vehicles.

Part B - Business/Private vs. Wholly Private

(15) Under the Salary Sacrifice (Vehicles) Policy eligible staff have the option of Packaging:

1. a business/private use vehicle; and
2. a wholly private use vehicle.

(16) Wholly private use vehicles involve no assumed business utilisation and do not need to be available at any time for official business use.

(17) As such wholly private use vehicles are costed on the basis of the staff member meeting all University incurred costs of acquisition and operation via their salary sacrifice.

(18) Business/Private Use Vehicles are vehicles that the staff member utilises for both official business travel and private travel including travel to and from work. These vehicles are costed in recognition of business use benefit to the University.

Part C - Basis of Costing of Business/Private Use

(19) A number of alternative costing bases can be utilised for the actual determination of the salary sacrifice benefit of Private Access (including log book recordings; the State Government formula of 70% private - 30% Business; formulae applied by the other NSW Universities). However, UWS has adopted the following calculation basis which will apply to all packaged Business/Private Use Vehicles:

1. Operating costs of vehicles will be apportioned on a 50/50 basis as between business and private use, based on an assumed 40,000 KM p.a. total travel profile. This apportionment recognises the substantial business use component in the work patterns of senior managers, given the multi-campus nature of UWS. The allocation of 50% to private use recognizes that travel to and from home is not business-related travel, and approximately one-third of the days of the year are non-working days (weekends, public holidays and recreation leave).
2. F.B.T. will be calculated on the assumed 40,000 KM total travel profile giving the lowest F.B.T. cost component. The salary package will be charged with all F.B.T. as this liability solely relates to the private use availability of the vehicle.
3. Deemed annual capital costs of vehicles (being interest on capital; depreciation/change-over costs and contribution to insurance excess) will all be fully charged to the staff member. This recognises that private use vehicles are an optional benefit selected by the staff member and result in a fleet holding well in excess of that required by the University for only business use. In calculating capital cost, however, the University will apply the benefit of government purchase price and fleet owners' discount; interest will be based on the UWS investment earning rate forgone, rather than a commercial interest rate; and depreciation/change-over costs will be assessed based on assumed change-over at, or near to, 40,000 KM or 2 years (whichever comes first). The inclusion of an insurance excess element avoids the need for staff members to contribute any excess in event of an "at fault" accident.
4. Business/private use vehicles may be used by the staff member and members of his/her direct family. In special circumstances, and following the approval of the Deputy Vice-Chancellor Corporate Strategy and Services, business/private vehicles may be used by drivers who are neither direct family members nor staff of the University. All users must be properly licensed. It is accepted by the University and the Insurers that the staff have given their approval for vehicle use, provided the driver is an immediate family member. Staff members are under no obligation to let other staff use the vehicle when they are not using it, but are encouraged to do so.

Part D - Costing of Wholly Private Use

(20) The University will cost the Salary Sacrifice required for a wholly private use vehicle based on the premise that all costs are to be fully met by staff members.

(21) Costing will be based on an assumed 20,000 KM use p.a. These calculations however will be retrospectively adjusted to reflect actual annual use in any circumstance where the assumed distance varies by + 5000 KM p.a. The variation factors will be limited to:

1. F.B.T.
2. Fuel Costs

(22) Wholly Private Use Vehicles may be used by the staff member and members of his/her direct family or, in special circumstances, by drivers approved by the Deputy Vice-Chancellor Corporate Strategy and Services. All users must hold Australian Vehicle Licences.

Part E - Insurance Arrangements

(23) All UWS salary sacrifice vehicles are comprehensively insured under a UWS umbrella Motor Vehicle Policy. That policy covers the vehicle being driven by the designated staff member and, with the approval of the staff member, his/her direct family.

(24) The following insurance excess will apply in the event of the vehicle being involved in an accident:

1. accident involving staff member as driver, or a member of the staff member's family over 25 years of age and with 3 years licensed driving experience - no excess charged to staff member. University meets the $1000 excess as the package value calculations build-in a factor for the base level excess;
2. accident involving a member of the staff member's family who is:
   1. under 21 years of age and has less than 3 years licensed driving experience - excess of $1000 will be charged to staff member;
   2. under 21 years of age but has 3 years licensed driving experience - excess of $700 will be charged to staff member;
   3. between 21 years and under 25 years of age and has less than 3 years licensed driving experience - excess of $650 will be charged to staff member;
   4. between 21 years and under 25 years of age but has 3 years licensed driving experience - excess of $350 will be charged to staff member;
   5. over 25 years of age but has less than 3 years licensed driving experience - excess of $300 will be charged to staff member.

(25) The above additional excess levels are those that are applied by our insurers under the UWS insurance policy.

(26) The University requires all staff members in control of a business/private vehicle to accept that approval for a family member to drive the University vehicle involves the staff member accepting liability in the event of an accident for any additional excess (above the base $500 level) as outlined above.

Part F - Choice of Motor Vehicles

(27) Eligible staff may access a range of vehicles which are available to the University under State Government Contracts. A schedule of available vehicles and the calculated annual salary sacrifice value is produced each year by the University.

(28) Eligible staff may only access vehicles which are available to the University under State Government Contracts or where an equivalent Government contract discount is available where such vehicles do not exceed the luxury car tax threshold as determined by the Australian Taxation Office and are not V8 powered.

(29) So as to avoid doubt, staff may not access vehicles under State Government Contracts that are special purpose or commercial vehicles. This includes, but is not limited to, vehicles that are identified as police vehicles and commercial vehicles greater than 1 tonne.

(30) A "Tool of Trade" vehicle is limited to the base model within the Holden, Ford or Toyota range of sedans or the model in the range offered by these companies above the base that allows for a cruise control facility. Alternatively, a vehicle of lesser value than the base model sedan and which is included in the State Government Contracts may be chosen from the range offered by these companies. The salary sacrifice contribution rate for the "Tool of Trade" motor vehicle accessed is as per the rate specified in the schedule for the make and model of the vehicle accessed.

Part G - Optional Extras

(31) The University's Policy is to allow staff to select options that do not significantly increase the capital cost of the vehicle, alter the operating costs or impact negatively on the change-over price differential. Options that are approved include tow packs; customised upholstery; sound systems; sun roofs and Global Positioning Systems.

(32) Options are costed to the staff member's package based on the Capital and F.B.T. cost elements.

Part H - Equity in Vehicles

(33) The University retains equity in all vehicles. Disposal or change-over of vehicles must be arranged via the University's Purchasing and Assets Unit.

Part I - Control of Vehicles

(34) The staff member involved in the salary sacrifice is deemed to be in control of the vehicle, whether business/private or wholly private. The staff member is responsible for ensuring:

1. Only licensed drivers are given access to the vehicle
2. The vehicles are operated on a 'non smoking' in vehicle basis
3. All fines (driving and parking) are the personal responsibility of the driver or (if unidentified) the staff member
4. The vehicle is maintained in a clean and tidy state and serviced in accordance with the recommended Dealer schedule
5. Any damage to or accidents involving the vehicle are promptly reported in writing to the University's Purchasing and Assets Unit.

Part J - Access to Vehicles Whilst on Leave

(35) Vehicles taken as wholly private are automatically available whilst on periods of leave.

(36) Business/Private Vehicles will be available to staff member during leave periods for up to six weeks per annum. If the staff member wishes to use the vehicle for leave periods in excess of six weeks, the wholly private charge rate for the make and model of vehicle will apply to those "excess" days. The restriction on a "Tool of Trade" vehicle allowing travel only within New South Wales also applies to the use of the vehicle by the nominated staff member whilst on leave. Use of the vehicle in this instance for staff on leave will be limited to six weeks per annum.

(37) Staff are encouraged to arrange to have their vehicle available for University business use when travelling overseas for official business or during leave periods where they have no requirement to access the vehicle.

Part K - Procedure to Initially Access a University Vehicle Under Salary Sacrifice

(38) Eligible staff may request that they be allocated a selected vehicle under salary sacrifice arrangements. All such requests shall be submitted to the Director Finance via the staff member's Executive Dean or Director. The Director Finance, will confirm eligibility and acceptability of vehicle selection and arrange procurement action. The Purchasing and Assets Unit will advise the Office of Human Resources of the salary sacrifice amount based upon the Vehicle Schedule value and the costs of options added.

(39) Form V3 - UWS Salary Sacrifice Notification

Part L - Costing of Benefit

(40) In order to determine the cost of the Salary Sacrifice Benefit the University will annually calculate:

1. Capital purchase price of approved vehicles. This price will be at cost to the University (government contract and fleet discount included). In line with State Government Policy (Premier's Dept Circular 2000-46), G.S.T. at 10% will be included in the capital price for package calculations.
2. F.B.T. liability to be met by the staff member. In case of Business/Private Vehicles this will be based on 7% of the Capital Value in (a) above, using assumption of 40,000 KM total travel p.a. for vehicle. In case of Wholly Private Vehicles, F.B.T. will be at 20% of capital cost reflecting the assumed 20,000 KM usage level.
3. Operating costs based on assumed annual travel of 40,000 KM, including fuel, servicing, comprehensive insurance, registration and C.T.P. insurance. These costs will be apportioned 50/50 as between business and private travels. For Wholly Private vehicles, the calculation is based on 20,000 KM p.a.
4. Capital cost component reflecting interest forgone; depreciation/loss on change-over and allowance for insurance excess. The interest forgone rate will be established annually based on the University's short term investment earning rate in the prior year.

(41) Note: Following introduction of G.S.T. all sales/trade-ins of University vehicles include as part of sale proceeds G.S.T. which the University must pay over to the tax office. In accordance with State Government Policy, the G.S.T. component of the sales/trade-in price is excluded when calculating the change-over cost. Insurance excess allowance is based on an assumed incidence of one claim every two years.

Part M - Abnormal wear and tear and/or damage to a University business/private vehicle

(42) Under Part I of this policy, staff members are responsible for ensuring that business/private vehicles are maintained and serviced. They are also responsible for promptly reporting accidents involving the vehicle, as well as any damage to the vehicle. Vehicles should be maintained at a standard that will ensure a reasonable sale price and therefore minimise change-over costs.

(43) Where a staff member does not comply with these responsibilities and, as a result, the University is forced to incur repair costs or suffer abnormal loss on disposal, the staff member will be held responsible for the costs or loss.

(44) Such costs will be established by reference to the authorised dealer for the vehicle and these costs will be recovered as an addition to the salary sacrifice for the replacement vehicle. The additional cost involved will be recovered fully over a forward 12 month period. Where the staff member declines to meet these costs, the University will withdraw the right to access a business/private motor vehicle.

Part N - Changes in Policy

(45) The University reserves the right to automatically adjust the basis of calculation of salary sacrifice for any changes in government taxation policy involving F.B.T. or G.S.T. Such changes will normally be applied from the date of legislation.

(46) The University also reserves the right to alter the basis of calculation for other elements with a minimum of 12 months' notice.

(47) Actual costing of salary sacrifice amounts using the basis outlined in the Policy will be conducted annually as at end December with adjustments applied from the date of change-over of any private use vehicle in the new year i.e. the new rates do not apply until the vehicle is updated (or from date of acquisition if the staff member is acquiring private access rights for first time).

Section 4 - Procedures

(48) Nil.

Section 5 - Guidelines

(49) Nil.