Govt cracking down on ute owners dodging fringe benefit tax

The New Zealand Government has motioned that it’s investigating how many local ute owners are dodging paying fringe benefit tax (FBT) despite not meeting the exemption’s criteria.

While ute owners are not automatically exempt from paying FBT, there’s a perception that the local popularity of utes is significantly skewed by how easy it is to dodge paying FBT on them by listing them as work vehicles — even if they’re frequently used for personal reasons.

An Official Information Act request from the NZ Herald uncovered that Revenue Minister David Parker had received advice for how utes are taxed, and that Parker is considering acting on the advice.

Those perhaps concerned that the tax man might chase them down need not worry, at least for now. According to Parker, the IRD isn’t interested in these pursuits because there isn’t a lot of money to reclaim

“The advice I have is there isn’t actually an exemption for double-cab utes, the question is whether the existing rules are being properly enforced. […] Inland Revenue advised me that it’s not quite as big an issue relative to other enforcement priorities but we are having a look at the issue because they are proliferating,” Parker told NZ Herald.

Numerous political parties have shown support to the idea of making electric cars exempt or partially exempt from paying FBT. The Greens have raised the notion via a member’s bill designed to make e-bikes fully exempt and to give EVs a reduced rate.

The National Party, meanwhile, has said that if it were to gain power in the next election it would investigate making EVs exempt from FBT, while also allowing them to use bus lanes. This would be an effective replacement to the Clean Car Discount scheme, which National has already said it would scrap if in power.

A Newsroom report from early in the year, titled ‘Is NZ subsidising utes?’ referenced beliefs among those in the industry that non-compliance is common.

“We suspect there is a large amount of non-compliance in the area,” tax consultant Terry Baucher told Newsroom. “If you look at the level of FBT that’s being paid, it hasn’t been rising at the same rate as the other taxes. That points to me that something isn’t being dealt with.”