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Income Tax Act 2007

General collection rules - Employment-related taxes - Taxable value of fringe benefits

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

You could also call this:

“Calculating the value of a work vehicle for tax purposes”

When your employer gives you a car to use, they need to figure out how much this benefit is worth for tax purposes. They do this using a special table in the law.

If your employer uses this table to work out the value, they can reduce the amount they report as a benefit to you. The amount of the reduction depends on how often they pay fringe benefit tax (FBT) and the GST rate that applies to them.

If your employer pays FBT every three months, they use one formula to calculate the reduction. If they pay FBT once a year, they use a different formula for each quarter you or someone connected to you partly owned the car. And if they pay FBT based on the income year, they use yet another formula.

All these formulas use something called the ‘schedule 5 rate’. This is the GST rate that applies to your employer for the relevant time period, which you can find in another part of the law.

This reduction in the reported benefit helps to make the tax calculation fairer when your employer uses the standard table to value your use of the car.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520118.

Topics:
Money and consumer rights > Taxes
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Part R General collection rules
Employment-related taxes: Taxable value of fringe benefits

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

  1. This section applies when an employer has 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 excluding GST, under schedule 5, clause 6(a) in the following way:

  3. when FBT is paid quarterly, by a percentage calculated using the formula—
    1. when FBT is paid on an annual basis, by a percentage for each quarter in which the vehicle was part-owned by the employee or associated person calculated using the formula—
      1. when FBT is paid on an income year basis, by a percentage calculated using the formula—

        1. In the formulas, schedule 5 rate is the rate of GST specified in schedule 5, clause 10(b) to (e) for the employer and the relevant quarter and relevant income year, as applicable.

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        Notes
        • Section RD 57(1): amended, on , by section 541 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section RD 57(3): amended, on (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 214(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).