Fringe Benefit Tax Changes 

What is the proposed change?

• Category approach to motor vehicles

• Different categories:

  • 1. Full private use, mainly for private use, 100% inclusion rate 

  • 2. Partial private use, mainly for business use, private is permitted, 35% inclusion rate.

  • 2b. Limited private use farm vehicles, mainly used for farming operations, private use is permitted when not working, 35% inclusion rate

  • 3. Minor private use, for business use, only permitted for commuting, one worksite, 20% inclusion rate.

  • 4. Minor private use, for business use, only permitted for commuting, multiple worksites, 0% inclusion rate.

  • 4b. No private use pool car, for business use exclusively, no private use, 0% inclusion rate. 

• Incidental use are uses/events that allow the vehicle to be used privately while not changing the classification. 

• New rates for the calculation the value of vehicles for FBT purposes

  • Cost base:

    • Current standard: 20% annually, 5% quarterly

    • New standard: 22.8% annually, 5.7% quarterly

    • Hybrid vehicle: 19.6% annually, 4.9% quarterly

    • Electric vehicle: 17.0% annually, 4.25% quarterly

  • Tax book value option:

    • Current standard: 41.4% annually, 10.35% quarterly

    • New standard: 47.25% annually, 11.81% quarterly

    • Hybrid vehicle: 40.50% annually, 10.13% quarterly

    • Electric vehicle: 35% annually, 8.75% quarterly

• Changes would apply after 1 April 2027

What affect would this have on taxpayers?

•    Reduced compliance costs