Updates on Ute FBT Exemption

Fringe Benefit Tax (FBT) in New Zealand is when your employer provides you with benefits of working for them other than salary or wages. Non-cash benefits provided to employees or associates of employees are fringe benefits. 

Utes may be considered work-related as they are dual-purpose vehicles, however, this does not mean they are automatically exempt from FBT.

If you own a Ute and you pay very little Fringe benefit tax, it’s about to change as the Revenue Minister David Parker is considering applying limitations on FBT rules for Utes. Whereas, IRD states that double-cab Ute owners were never exempted from paying FBT (even though it’s a popular belief), instead they believe that the existing rules aren’t being enforced properly.

David Parker also said that IRD isn’t keen on chasing down Ute owners as it wouldn’t bring a lot of money, but the main reason for him to look at Ute FBT rules is the Government’s Climate change policies and growing trend of owning Utes. he further adds that Inland Revenue advised him that it's not quite as big an issue relative to other enforcement priorities but they are having a look at the issue because it is proliferating.

Utes (including extra cabs and double cabs) are qualified for exemptions from FBT, but they must be designed to carry goods, or goods and passengers equally. If the vehicle is designed mainly to carry passengers, it will not be exempted.

This has acted as an incentive for others to own a Ute to avoid tax regardless of whether they need the vehicle for the job. Ever since the government announced its Feebate Scheme which will charge fees on high emissions vehicle to pay for discounts on low emissions vehicles, the government have started looking at purchase and use of Utes.

However, the farmers and tradies are pretty upset over this as currently there are no electrical or hybrid alternatives to Utes and Prime minister Jacinda Arden’s comment on Ute buyers not using the vehicle for “legitimate use” was not liked by many, to which she later said that “she could have been clearer”.

Green party and other environmental groups have pressurised the government to stop the exemption as it is encouraging more people to buy Utes which are in the high polluting category. Green Party transport spokeswoman Julie Anne Genter says that FBT benefit is a major cause of double-cab Utes being provided as company cars.

Genter has a member's bill in the ballot to change the FBT rules in favour of cleaner transport, including removing it from e-bikes, reducing it for electric vehicles (EVs) and specifying double-cab Utes were treated the same as other passenger cars.

But on the brighter side for Electric Vehicle owners, the government announced that they would be extending the exemption for EV’s from paying road user charges, which will make them save up to $800 a year. The exemption will apply until 31st March 2021.

To summarise double cab Utes will be subject to FBT.