No Change To FBT Rules For Double Cab Utes

Inland Revenue has moved to clear up a misunderstanding by some commentors about the effect of new Fringe Benefit Tax (FBT) proposals, particularly those for double cab utes.

Inland Revenue Deputy Commissioner (Policy) David Carrigan says it’s a myth that utes have always been FBT free.

“When it comes to double cab utes, these are treated no differently to any other vehicle. Unless the use of the vehicle meets all the requirements for an exemption from FBT, then a double cab ute is, and always has been, subject to FBT. That is the current law,” David Carrigan says.

“Work-related vehicles are only exempt from FBT if they meet certain requirements. This includes double cab utes.”

FBT exemptions

A vehicle, including a ute, is exempt from FBT only on days it is used for essential work purposes as defined on our website Employer provided motor vehicles for private use.

David Carrigan says “vehicles that are used partly for business and partly privately are subject to FBT now on the days the vehicles are used for private use.

“The proposals do not change that treatment but remove the necessity to count days where a vehicle is or is not available for private use.

“The idea is to simplify FBT, not create additional obligations. If a business – including a farm – is not currently liable for FBT on a vehicle then it’s unlikely they would become liable for FBT under any proposals taken forward.

Consultation

“Inland Revenue has undertaken public consultation on FBT proposals, including for motor vehicles, after a lot of work with the tax community to understand businesses’ frustration with the current FBT rules.

“The aim of the proposals is not to increase revenue but rather focus on reducing the compliance costs of FBT by moving to a close enough is good enough approach rather than strict day counts of when a vehicle is and is not used for private use, ignoring any incidental use, such as stopping to pick up groceries on returning from business trip.

No decisions

“The government has not made any final decisions in relation to potential changes to the FBT regime and Ministers are currently considering the feedback received from submitters on the Inland Revenue issues paper with a view to refining those proposals.

“The Government is considering feedback from consultation and any changes would progress through the normal legislative process, giving people another opportunity to make submissions,” David Carrigan says.

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