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Income Tax Act 2007

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

RD 29: Private use of motor vehicle: formulas

You could also call this:

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

When your employer lets you use a company car for personal reasons, they need to figure out how much this benefit is worth. The way they calculate it depends on how often they pay fringe benefit tax (FBT).

If your employer pays FBT every three months, they use a formula that looks at how many days you had the car for personal use in those three months. They take that number, multiply it by an amount from schedule 5, and then divide it by 90.

For employers who pay FBT once a year, they do the three-month calculation four times and add up the results.

If your employer pays FBT based on their income year, they use a similar formula. They count the days you had personal use of the car during the whole year, multiply by the schedule 5 amount, and divide by 365.

When counting the days, your employer subtracts any days when the car was used only for work. The schedule 5 amount is based on what it would cost if you had unlimited personal use of the car.

Your employer can also choose to use a test period to figure out how much you use the car for personal reasons. They can learn more about this in section RD 31.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520008.

Topics:
Money and consumer rights > Taxes
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RD 28: Private use of motor vehicle: calculation methods, or

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

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RD 30: Private use of motor vehicle: 24-hour period, or

“Rules for counting a day when calculating personal use of a work vehicle”

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

RD 29Private use of motor vehicle: formulas

  1. This section sets out the formulas for calculating the value of the benefit that an employer provides to an employee by making a motor vehicle available for their private use.

  2. If FBT is paid quarterly, the value of the benefit is calculated using the formula—

    days × schedule 5 amount ÷ 90.

    Where:

    • If FBT is paid on an annual basis, the value of the benefit is the total of the amounts calculated under subsection (2) for the 4 quarters in the applicable tax year.

    • If FBT is paid on an income year basis, the value of the benefit is calculated using the formula—

      days × schedule 5 amount ÷ 365.

      Where:

      • In the formula,—

      • in subsection (2), days refers to the number of days in the quarter on which the vehicle is made available for private use, reduced by the number of days on which the vehicle was a work-related vehicle, or 90, whichever is less:
        1. in subsection (4), days refers to the number of days in the income year on which the vehicle is made available for private use, reduced by the number of days on which the vehicle was a work-related vehicle:
          1. in subsections (2) and (4), schedule 5 amount refers to the amount calculated under schedule 5 (Fringe benefit values for motor vehicles) as the value of the benefit that would have been received for unlimited private use of the vehicle in that quarter or income year, as applicable.

            1. To calculate the value of the benefit, an employer may choose to use a test period under section RD 31 to establish private use.

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