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New Zealand law explained for everyone

Income Tax Act 2007

Income - Excluded income - Fringe benefits

CX 6: Private use of motor vehicle

You could also call this:

“Rules for when personal use of a company vehicle counts as a taxable benefit”

You get a fringe benefit when someone gives you a motor vehicle that you can use for your own personal reasons. This happens when the person who gives you the vehicle owns it, rents it, or has permission to use it.

This rule doesn’t apply if the vehicle is for work purposes only. It also doesn’t apply if you’re a shareholder-employee of a close company and the company chose to use different rules about motor vehicle expenses instead of the fringe benefit tax rules.

You don’t get a fringe benefit if you use the vehicle for an emergency call. Also, if your job requires you to be away from home a lot and use a vehicle, you don’t get a fringe benefit when you’re away from home for at least 24 hours in a row with the vehicle.

On days when you use the vehicle for an emergency call or when you’re away from home for work, the whole day is treated as if you couldn’t use the vehicle for personal reasons.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513342.

Topics:
Money and consumer rights > Taxes
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“How exempt income relates to fringe benefits”

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CX 7: Employer or associated person treated as having right to use vehicle under arrangement, or

“Employer treated as having right to use employee's car during personal use”

Part C Income
Excluded income: Fringe benefits

CX 6Private use of motor vehicle

  1. A fringe benefit arises when—

  2. a motor vehicle is made available to an employee for their private use; and
    1. the person who makes the vehicle available to the employee—
      1. owns the vehicle:
        1. leases or rents the vehicle:
          1. has a right to use the vehicle under an agreement or arrangement with the employee or a person associated with the employee.

          2. Subsection (1) does not apply when the vehicle is a work-related vehicle.

          3. Subsection (1) does not apply if the employee is a shareholder-employee of a close company and the close company made an election under section CX 17(4B) to apply subpart DE (Motor vehicle expenditure) instead of the FBT rules.

          4. Subsection (1) does not apply when the vehicle is used for an emergency call.

          5. Subsection (1) does not apply when the employee is absent from home, with the vehicle, for a period of at least 24 hours continuously, if the employee is required, in the performance of their duties, to use a vehicle and regularly to be absent from home.

          6. For the purposes of subsections (3) and (4), the whole of the day on which a motor vehicle is used as described in the applicable subsection is treated as a day on which the vehicle is not available for private use.

          Compare
          Notes
          • Section CX 6(2B) heading: inserted, on (applying for the 2017–18 and later income years), by section 67(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
          • Section CX 6(2B): inserted, on (applying for the 2017–18 and later income years), by section 67(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
          • Section CX 6 list of defined terms close company: inserted, on (applying for the 2017–18 and later income years), by section 67(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
          • Section CX 6 list of defined terms FBT rules: inserted, on (applying for the 2017–18 and later income years), by section 67(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
          • Section CX 6 list of defined terms shareholder-employee: inserted, on (applying for the 2017–18 and later income years), by section 67(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).