So you think your ute is exempt from FBT?

Are you sure? Nine times out of ten, it won’t be. Just because this type of vehicle is commonly used as a work-related vehicle does not automatically mean a ute will be exempt from FBT (Fringe Benefit Tax).

Therefore, take a moment to consider the utes in your business to ensure you are meeting your FBT obligations.

To be exempt from FBT, a ute needs to fall within the “work related vehicle” definition, which includes the requirement that the ute is not available for private use by the employee.

For a ute to be eligible for the work-related vehicle exemption, all of the following criteria need to be met:

• The ute must not be designed exclusively or mainly to carry people (Inland Revenue has confirmed that a double-cab ute is not designed exclusively or mainly to carry people), and
• The ute must have the name of the employer’s business prominently and permanently displayed on the exterior, and
• The employer must provide the employee with a letter of restriction stating that the ute is not available for private use except for travel between home and work, and for travel related to the business, and
• Checks are carried out quarterly to ensure that the employee is only using the ute for work purposes.

If the employer allows the ute to be used for some private purposes, such as on the weekends, then FBT will be payable on those 2 days each week, regardless of whether the ute is actually used privately on the weekend.

Therefore, if you have a sign-written ute, don’t automatically assume that it will be exempt from FBT; it must also not be available for private use.

Talk to our experts

Please reach out to one of our trusted Nexia Advisors if you need any assistance determining the FBT treatment of your ute, or your wider fringe benefits.

Nexia is one of New Zealand’s best accounting and business advisory consultancy firms offering the full range of accounting, advisory, audit, tax and insolvency services. Nexia New Zealand has offices on Victoria Street in the Christchurch CBD, Albany and Newmarket in Auckland, and Hastings in the Hawke’s Bay. Our Albany office has one of the largest teams of tax consulting specialists on the North Shore.