You are absolutely correct about receiving $ per mile … I was addressing the “hefty write-off” language.
I prepare taxes and am always amazed by the people who don’t fully comprehend the dif between real money, a tax deduction and even a tax credit.
Yep, my dad is a Ford engineer and he has had management lease cars for the last ten years or so. Still, I never heard him or anyone else refer to it as a “company car”. Everyone just thought of the management lease cars as an improved version of the discount that all Ford employees could get on a new car. It was a pretty great perk though, since the already-discounted price included full insurance and maintenance. The free insurance was a humongous benefit for managers with teenage kids.
My daughter lives in Germany, and her boyfriend, who works for a consulting company, got a company car immediately, which is his main car, even the three days he spends at home a week.
30 years ago when I worked for AT&T we had a fleet of (boring) company cars parked at our center which we took for airport trips or when visiting other centers. That had dried up by the time I left. My current company has none.
Since cars in Israel cost double (sometimes more than double) what they cost in US, I can see how it would be a major benefit to give to an employee.
The biggest problem with cars and similar perks is this - in Canada, any perk given to an employee is considered taxable income at the equivalent value. I.e. if XYZ Limited gives its sales manager a car, and he uses it for personal use, he must pay tax as if XYZ had given him the equivalent of payments, maitnenance, etc. in cash.
This can be mitigated by keeping a log of what proportion of the mileage is devoted to company business. However, “commute to regular place of employment” is not considered company business, since everyone does it and the tax system gives no break to commuting with your own car.
Some employees may want a minivan rather than a BMW 330; some may not want to expose expensive upholstery to rambunctious toddlers who drop mashable chocolate and stain-making food on the seats and floor; some may need a bigger vehicle. All in all, giving cash and letting the employee make his own choices makes sense except when appearances (i.e. sales reps) are an issue.
The tax rules changed about 1980. Before that, a car or housing or club membeships were free perks. The company wrote them off, and the employee got a free extra. Not now…
Not sure the details in other countries, but I believe it works the same in the USA, hence the limited company car culture.
In the Beatles song, **Taxman, **
“Let me tell you how it’s going to be,
One for you nineteen for me…”
An article I read about pre-Thatcher Britain mentioned that in the 1970s the top marginal tax rate was 84% (socialism, anyone?). For top-paid employees, you had to break the bank to give them enough money for them to take home and appreciable chunk of cash; however, company cars were not taxable at the time, so a company could give the high-paid engineer, accountant, executive, or lawyer his own car, and even a chauffeur, cheaper than giving him a whack of take-home cash.
Company cars (and drivers) are a huge thing in China. Not to mention company apartments, etc.
Company housing isn’t completely unheard of it the US either, but it’s limited to remote workplaces, some seasonal jobs, and temporal relocations. Or as a transitory measure to induce an employee to relocate permanently (ie if you transfer to location x we’ll throw in 6-8 weeks of corporate housing while you find a new place).
This. If you drive the same car as the guy in the office next to yours then it will be less obvious to everyone that your last bonus was larger than his.
The common arrangement is for the company to lease a car on the employee’s behalf–not buy a fleet of Camrys. The employee can pick his own car within some budget.
That might work in the US if you get reimbursed the way I do ( the IRS rate so it doesn’t need to be reported on my tax return). It doesn’t work if you get “reimbursed” the way my husband does, which is he gets a set amount per month, declares that amount as income on the tax return ,calculates how many business miles he drove, multiplies that by the IRS mileage rate, and then deducts whatever is over 2% of our adjusted gross income- which just means we don’t pay taxes on that amount.
There’s also this - the perception that a car is an expression of who you are, rather than just a means for getting from point A to point B. That’s an attitude that exists everywhere, but seems to be more common in the U.S..
But everything is an expression of who you are. Your clothes are, rather than just a means for protecting you from the weather, otherwise why not wear a brown sack? Your residence is, rather than just a means of having a roof over your head, otherwise why decorate? The food you eat is, rather than just a means of nutrition, otherwise why not just eat a fully nutritious paste?
So, why would the car be an exception?
Because cars are expensive, and when you have a family to feed, you can’t waste money on self-expression. If someone is giving you a perfectly nice, perfectly comfortable car that happens to be identical to every other car on the road, then fine. Whatever. It’s a car.
The same here. Most companies offer it to mid management types. Except the popular car is a Toyota Corolla.
Might be a commonwealth/former British possession thing.
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That’s because you live in a country where cars are hugely expensive. Two to three times the cost in the US.
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You hugely underestimate human desire for self-expression.
Someone’s offering you a decent car at a low price, and you don’t take it? What are you, some kind of sucker?
(And THAT’s the Israeli attitude).
Yes, I remember when, in Israel, if you wanted a decent car at a reasonable price, you had only one choice - a Subaru sedan (since Susita was a joke, Mercedes diesels and American cars were double the Subaru’s price, and the other Japanese car companies were not exporting to Israel due to Arab boycott). I don’t remember that as a particularly happy time for would-be car owners, and I don’t think anyone fondly remembers driving that Subaru with a million other Subarus around you on the road.
You may deride that desire to not be exactly like everyone else as vain self-expression. I call that a natural human instinct.
So is taking a good deal when one is offered to you.
Jesus, do I have to delve into stereotypes? Getting a company car is like buying something at wholesale. Who’d turn that down?
It used to be pretty much identical here in South Africa - I think some tax changes and concomitant logging requirements may have made it a bit less attractive than it was in the past, but it’s still a thing.
You must have visited Israel in 1985 or 1986. That’s right after the tax laws changed, (reducing the sales tax on a new car from 300 percent to a mere 150 per cent!), and for the first time in Israeli history a working family could afford a car.There were very,very few dealers; Subaru had a small 4 door model which fit most people’s needs, so most people bought it—and were very, very happy about it. Remember, this was the first car anybody had ever owned, so nobody was going to get upset if the neighbor also bought the same car.
Since 1985, the Israeli car market has exploded , with all the manufacturers available. There is even a Ferarari/Lamborghini dealer in Tel Aviv. So , yes some people are getting more picky and “uppity” in their choices, just like in America.
But we’re getting a little off topic, heh?
Back to the OP—one aspect of the Isreali corporate car that may be different than other countries, is that the Israeli companies always have their logo painted on the car. Usually it’s a small decal in a fairly subtle location–on the gas cap, or next to the keyhole in the trunk (that’s the boot, for you Brits) lid.
But the decal makes it obvious (to someone who wants to look) that you are driving a company car. Americans would be horrified, I think, to be labelled that way. But in Israel, it’s not a big deal, and even a sign of respect.
It means that you have a high enough position that you qualified for a company car. For for people who want to flaunt their status, that’s a good thing. But most people in Israel don’t care