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Income Tax Act 2007

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

RD 33: Subsidised transport

You could also call this:

“How subsidised transport from your employer is treated as a taxable benefit”

If your employer gives you subsidised transport, it’s considered a benefit. The value of this benefit is usually 25% of the highest fare your employer charges the public for the same type of transport.

Sometimes, your employer might arrange for someone else to give you subsidised transport. In this case, the value of the benefit is the biggest of these three amounts:

  1. 25% of the highest fare your employer charges the public for the same type of transport.
  2. 25% of the highest fare the other person charges the public for the same type of transport, if that person’s company is in the same group as your employer’s company.
  3. The amount your employer paid or has to pay the other person for giving you the transport.

If your employer can claim input tax for the subsidised transport and is registered for GST, the amount includes GST.

This law applies to all types of subsidised transport, no matter what class it is, how far you travel, or when you use it.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520025.

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

RD 33Subsidised transport

  1. The value of a benefit that an employer provides to their employee in subsidised transport is 25% of the highest fare the employer charges the public for the equivalent transport in terms of class, extent, and occasion. This subsection is overridden by subsection (2).

  2. Despite section CX 2(2) (Meaning of fringe benefit), if the fringe benefit is provided under an arrangement with a third person, the value of the benefit is determined under subsection (3).

  3. If a third person provides the employee with subsidised transport under an arrangement with their employer, the value of the benefit is the greatest of—

  4. 25% of the highest fare the employer charges the public for the equivalent transport in terms of class, extent, and occasion; and
    1. 25% of the highest fare the third person charges the public for the equivalent transport in terms of class, extent, and occasion, if the third person is a company in the same group of companies as the employer; and
      1. the amount that the employer has paid or is liable to pay the person for the benefit provided.

        1. In this section, for a registered person who may claim input tax for subsidised transport, amount means the GST-inclusive amount.

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