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Income Tax Act 2007

General collection rules - Employment-related taxes - Value of fringe benefits

RD 28: Private use of motor vehicle: calculation methods

You could also call this:

“How employers calculate the value of personal car use by employees”

When your employer lets you use their car for your personal activities, they need to calculate how much this benefit is worth. There are rules about how they can do this calculation.

When your employer first reports about the car, they can choose one of two ways to figure out the value of you using the car. These ways are described in schedule 5.

Once your employer picks a way to calculate the value, they have to keep using that same method for a while. They must use it until one of these things happens:

  • The car is sold
  • The employer stops leasing the car (and doesn’t immediately start a new lease)
  • Five years have passed since the first report

After five years, your employer can choose again between the two ways of calculating the value.

However, there’s a special rule. If your employer or someone connected to them owned or leased the car before 1 April 2006, they must use a method called the “cost price valuation method”. This is explained in schedule 5, clause 1 or 2.

This special rule doesn’t apply if the first report about the car was made after 1 April 2006, unless there’s a special arrangement as described in section CX 7.

Also, if your employer owns the car and it’s been more than five years since the first report, they don’t have to use the special rule anymore.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520006.

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Money and consumer rights > Taxes
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RD 29: Private use of motor vehicle: formulas, or

“How to calculate the value of personal use of a company car”

Part R General collection rules
Employment-related taxes: Value of fringe benefits

RD 28Private use of motor vehicle: calculation methods

  1. This section limits the way an employer may use a method for calculating the value of the benefit that they provide to an employee by making a motor vehicle available for the employee’s private use.

  2. When a person first files a return relating to a vehicle for the purposes of this section, they may calculate the value of the benefit using either of the valuation methods set out in schedule 5 (Fringe benefit values for motor vehicles).

  3. The person must use the method chosen in the first return referred to in subsection (2) in calculating the value of the benefit for the length of time—

  4. starting after the end of the period of the first return; and
    1. continuing to the earliest of the following dates:
      1. the date of the disposal of the vehicle:
        1. the date on which the vehicle ceases to be leased by the employer or an associated person without a consecutive or successive lease of the vehicle by them:
          1. the date that is 5 years after start of the period of the first return.

          2. In a return relating to the vehicle for a period beginning 5 years or more after the start of the period of the first return, the person may calculate the value of the benefit using either of the valuation methods set out in schedule 5.

          3. Despite subsections (3) and (4), the person must apply schedule 5, clause 1 or 2, using the cost price valuation method if—

          4. the vehicle is owned, leased, or rented by the employer or an associated person; and
            1. the employer or the associated person owned, leased, or rented the vehicle—
              1. during the period of the first return, if the period begins before 1 April 2006:
                1. before 1 April 2006.

                2. Subsection (5) does not apply if a first return for the vehicle is for a period that starts on or after 1 April 2006 and the vehicle is not the subject of an agreement or arrangement referred to in section CX 7 (Employer or associated person treated as having right to use vehicle under arrangement).

                3. Subsection (5) does not apply if the person owns the vehicle and a period of 5 years or more since the start of the period of the first return has elapsed.

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