How To Beat The Upcoming UTE Tax Increases

In the blink of an eye, we’re heading into the final stretch of 2021. With 2022 quickly approaching on the horizon, it brings in its wake new regulations and penalties for purchasing UTEs. There are thousands of avid fans of these vehicles across New Zealand and if you’re looking to avoid these additional costs, your window of opportunity is closing fast!

So What Is The Reason For The New UTE Tax?

UTE owners are currently facing a financial threat from two different fronts. The first being the IRD’s increasing interest in businesses dodging fringe benefit tax for work-related vehicles. Fringe benefit tax, or FBT, is the tax employers have to pay when employees benefit off a company asset for private use, such as a company car. The exemption to FBT is for vehicles that are intended for business and not private use, are sign written, and are designed not to solely transport people. This means that cars are not liable for this exemption, but UTEs are. This has led to a major uptake of UTEs over the years so that businesses can avoid these taxes. However, there is growing concern from the IRD that the FBT associated with using these vehicles privately has not increased alongside other taxes, leading them to believe that many businesses are skirting having to pay them.

While the FBT is a concern for businesses that have been avoiding the tax, the second penalty comes in the form of the government’s Clean Car Discount initiative. This initiative is designed to lower the carbon emissions in New Zealand by rewarding the purchase of low and zero-emission vehicles. There are certain criteria that the purchase needs to meet in order to be eligible for one of the rebates set by the incentive. Between 1 July and 1 April 2022 fully electric vehicles that produce zero emissions are eligible for a rebate of $8625 for new imports, and $3450 for a used import. Low emission vehicles, such as plug-in hybrid electric vehicles are eligible for a $5750 rebate for new imports and $2300 for used imports.

But how does this rebate affect potential UTE buyers not looking to purchase a fully electric or plug-in hybrid vehicle? Unfortunately, the clean car discount is set up to pass the buck, and it’s those who are looking to purchase a new UTE that is going to be left holding the bag.

What Are The Penalties For Buying a UTE in 2022?

The Clean Car Discount scheme is designed to ensure that no cost is passed on to the Crown. This is done by penalising higher emission vehicles. The most common vehicles in this category in New Zealand are UTEs. This penalty is on top of the price that the vehicle costs and is applicable to both new and used purchases. The fees are calculated on the emissions of the vehicle, adding up to $5175 to the sticker price of a new import and $2875 for a used import.

For even heavier diesel vehicles, the penalty isn’t clear.

Originally slated to commence on 1 January 2022, the recent New Zealand Covid outbreak deferred the starting date for the fees to 1 April 2022. While this may seem like a bit of breathing room for potential buyers for UTEs, the current pressure on the supply chain and worldwide semiconductor shortage make it unlikely to amount to any sort of advantage.These fees are seen as the Government testing the water and experts are in agreement that the penalty is likely to increase in 2023. With this in mind, now may be the best time to purchase a UTE to avoid a significant increase in their cost.

Are You Penalised for Buying a UTE in 2021?

With all this talk of prices increasing in the UTE market, you’ll be pleased to note that it is not too late to upgrade or purchase a new vehicle and avoid these price hikes. It's no exaggeration to say that now is the time to purchase a UTE, and many prospective buyers have already clicked on this fact and are putting a high demand on the supply. Simon Lucas Mitsubishi is pleased to announce that it has secured a shipment of 2021 Mitsubishi Tritons to meet the demand. However, due to the pressure on the supply chain and the looming penalties on purchasing UTEs, this stock will not last long. Many are already on preorder and the rest of the supply is expected to leave the yard in a matter of weeks.

The 2021 Mitsubishi Triton has earned its tagline of “Work hard. Play Hard”. It provides drivers a highly versatile utility vehicle that can tackle almost any obstacle thrown at it. Perfect for the worksite, farm, or to take the family on an adventure, it is widely viewed as one of the best value for money UTEs on the market. The 2021 Mitsubishi Triton holds its own against its competitors in higher price brackets. Even given its incredible price point, the 2021 Mitsubishi Triton is jam-packed with features often only reserved for more expensive options. With models to suit almost anyone's requirement, getting your hands on a 2021 Mitsubishi Triton before the end of the year is your best opportunity to take full advantage of its price tag. Even with the deferred start to the scheme, it is still unlikely that we will be able to receive another shipment of 2021 Mitsubishi Tritons prior to April 2022. After the scheme comes into effect in April next year, a 2WD 2021 Mitsubishi Triton will cost an extra $3800, while the 4WD model will set you back an extra $4080.

If you’ve been sitting on the fence about upgrading to a 2021 Mitsubishi Triton, your window of opportunity to take advantage of its current price is quickly coming to a close. Simon Lucas Mitsubishi’s final shipment of Mitsubishi Tritons will land in November and be available for pick up in December. After this shipment has been sold, there will be no more coming into New Zealand before the Clean Discount scheme comes into effect and the price of UTEs across the market goes up. The highly experienced team at Simon Lucas Mitsubishi can assist you in finding the perfect vehicle for your requirements. So pop into our showroom on the North Shore, book a test drive or get in contact with us via our website today!

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