Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Excluded income - Fringe benefits

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

You could also call this:

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

When you’re an employee, and your employer or someone connected to them makes a deal with you or someone connected to you about using a car, there are some special rules. These rules are about fringe benefit tax, which is a kind of tax on extra things you get from your job.

If you make an agreement that gives your employer or someone connected to them the right to use a car, the tax rules treat it in a specific way. Your employer (or the person connected to them) is considered to have the right to use the car during any time when you use it for personal reasons or when you have the right to use it personally.

This means that even if you’re the one actually using the car for personal stuff, the tax rules act as if your employer has the right to use it during that time. This is important for working out the fringe benefit tax.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513344.

Topics:
Money and consumer rights > Taxes
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CX 6: Private use of motor vehicle, or

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

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CX 8: Private use of motor vehicle: use by more than 1 employee, or

“How multiple employees' personal use of a company car on the same day is taxed”

Part C Income
Excluded income: Fringe benefits

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

  1. This section applies for the application of the fringe benefit tax (FBT) rules to an agreement or arrangement—

  2. between an employer, or a person associated with the employer, and an employee, or a person associated with the employee; and
    1. transferring to the employer or person associated with the employer a right to use a motor vehicle under terms agreed between the parties.

      1. The employer or associated person is treated as having a right to use the motor vehicle for a period during which the employee—

      2. uses the vehicle privately:
        1. has a right to use the vehicle privately.

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