Last night’s Federal Budget brought with it a number of changes related to the automotive industry and Australian motorists.

Among the most significant was the revision of the Fringe Benefits Tax (FBT) system for vehicles, which CarAdvice detailed in a story last week.

In simple terms, the ‘sliding scale’ taxation system that was dependent on the number of kilometres travelled has been replaced by a 20 percent flat rate.

The previous system unintentionally encouraged people to drive extra kilometres towards the end of the financial year to receive bigger tax concessions.

The new reform will be phased in gradually over the coming years, with those travelling more than 40,000km to be taxed 10 percent of their vehicle’s value in 2011, 13 percent in 2012, 17 percent in 2013 and the full 20 percent in 2014.

The updated system will only apply to new contracts signed after May 10, 2011.

Federal Chamber of Automotive Industries CEO, Andrew McKellar, said he accepted the move to a flat-rate FBT system, but insisted the FCAI would keep a close eye on its affect on motorists.

“Industry will be concerned to ensure that those people who legitimately need to use their vehicle for business purposes are not faced with an unnecessary tax hike as a consequence of this measure,” Mr McKellar said.“Just because you live a bit further from the city, or in a country town and need to cover longer distances, doesn’t mean you should pay more tax on the car you drive.”

Also included in the Budget was a $5000 tax write-off for vehicles purchased by small businesses.

The measure is expected to cost the Government $350 million and provide many small businesses with an additional benefit of around $1000 every year.

It will be introduced in the 2012/2013 financial year.

The Budget also included around $7 billion for new investment in transport infrastructure, which includes roads and other forms of transportation.

Among the bigger tasks are the duplication of the Pacific Highway and the completion of the Townsville Ring Road.

In total, $2.4 billion was allocated to NSW, $1.2 billion to Queensland, $1.1 billion to Victoria, $921 million to WA, $585 million to South Australia, $144 million to the Northern Territory, $121 million to Tasmania and $82 million to the ACT.

A $61 million investment was made into ‘Smart Roads’, which is a scheme designed to manage roads and motorways and generally keep traffic flowing.

State governments will receive funding to conduct further studies and trials on ‘smart technologies’ like variable speed limit and message signs.

The M1 West Gate Freeway (Victoria), the M4 Western Motorway (New South Wales), the Gateway Motorway (Queensland) and another unnamed highway in Western Australia were all listed in the Budget to share the money.