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RD 55: Private use of motor vehicle: taxable value in cases of part ownership
or “How to calculate tax on personal use of a partly-owned work vehicle”
You could also call this:

“Rules for reducing taxable value when employer provides a motor vehicle”

When your employer gives you a motor vehicle to use, they need to work out how much tax to pay on this benefit. If they haven’t used a special table to value the vehicle, they can reduce the taxable value in certain ways.

If your employer pays fringe benefit tax (FBT) every three months, they can reduce the value by 2.5% of what the vehicle cost you or someone connected to you. If they pay FBT once a year, they can reduce it by 2.5% for each three-month period you or someone connected to you partly owned the vehicle. If they pay FBT based on the income year, they can reduce it by 10%.

Sometimes, the period your employer reports FBT for might not match a normal income year. This could happen if they started or stopped their business during that year, or if they’ve agreed with the tax department to report FBT on a different date. In these cases, they use a special calculation to work out how much to reduce the taxable value by.

If you haven’t owned part of the vehicle for the whole period, the reduction is adjusted based on how long you were a part-owner.

When referring to other parts of this law, your employer should look at sections RD 28 to RD 30 and section RD 57(2)(c) and (3) for more information.

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Next up: RD 57: Private use of motor vehicle: when schedular value used

or “Calculating the value of a work vehicle for tax purposes”
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Part R General collection rules
Employment-related taxes: Taxable value of fringe benefits

RD 56Private use of motor vehicle: when schedular value not used

  1. This section applies when the employer has not valued the motor vehicle using schedule 5, clause 9 (Fringe benefit values for motor vehicles).

  2. In the calculation of the taxable value of the fringe benefit, the value of the benefit determined under sections RD 28 to RD 30 is reduced by an amount that is the applicable percentage of the cost (determined including GST under schedule 5, clause 8(a)) of the motor vehicle to the employee or the associated person as follows:

  3. if FBT is paid quarterly, 2.5%:
    1. if FBT is paid on an annual basis, 2.5% for each quarter in which the vehicle was part-owned by the employee or the associated person:
      1. if FBT is paid on an income year basis, 10%.

        1. In subsection (2)(c) and section RD 57(2)(c) and (3), if the period for which the employer accounts for FBT differs from a normal income year for the reasons described in subsection (4), the amount by which the taxable value of the fringe benefit is reduced is a percentage of the cost (determined including GST under schedule 5, clause 8(a)) of the motor vehicle to the employer or the associated person equal to the amount calculated using the formula—

          10% × number of days in period ÷ 365.

          Where:

          • The period for which the employer has accounted may be longer or shorter than the normal income year because the employer has either—

          • started or ceased business during that income year; or
            1. chosen, with the agreement of the Commissioner, to provide a fringe benefit return for the income year ending with the date of the annual balance of their accounts.

              1. If an employee has not been part-owner of the motor vehicle for the whole of the income year, or the period referred to in subsection (4), a reduction under this section is reduced by the proportion of the number of days of the income year or period for which the employee was not a part-owner to the total number of days of that income year or period.

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              Notes
              • Section RD 56(1): amended, on , by section 540(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
              • Section RD 56(2): amended, on , by section 540(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
              • Section RD 56(3): amended, on , by section 540(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).