Category Archives: fringe benefit tax

Fringe Benefit Tax – Reply from Inland Revenue

There is nothing much more humbling than motherhood. No matter how competent you are in your day job, one’s darling offspring have the ability to test every part of you.

For that reason I have rarely met arrogant mothers. Sure most of us have views about the right way of handling things but that is really a function of values and how your particular child works.

Because children’s superpower is their ability to ensure that we are only ever one meal or one exam or one party away from fully questioning our ability to raise the next generation.

Tax is much like that too. Tax people can be confident but we all know that we are only ever one opinion – missing a section or a case – away from falling completely on our faces.

And so it is for me on my recent post on Fringe Benefit Tax and double cab utes. Inland Revenue have kindly reached out to me to point out I overlooked a subsection – not the first time that has happened – and so office workers could not get the work related exemption if they had a sign written double cab ute.

I accept their analysis and accept that there is nothing in the law or its interpretation by Inland Revenue – as they have outlined it – that is driving the double cab ute phenomenon.

However it would be good to know how much FBT – or personal use adjustments – actually arises from personal use of the double cab utes. Because the ones I see aren’t even sign written.


Reply from Inland Revenue

Hi Andrea

We have read your recent blog “Emissions, Feebates and Fringe Benefit Tax”(12 July 2019) and have a couple of comments regarding double cab utes and the work related vehicle exemption. 

You have suggested that a sign-written double cab ute would be exempt from FBT under the work-related vehicle exemption.  However, the work-related vehicle exemption is actually far narrower than that.    Section CX 38 defines work-related vehicle: 

CX 38 Meaning of work-related vehicle


(1)             Work-related vehicle, for an employer, means a motor vehicle that prominently and permanently displays on its exterior,—

(a) if the employer owns the vehicle, the form of identification that the employer regularly uses in carrying on their undertaking or activity; or

(b) if the employer rents the vehicle, the form of identification—

(i) that the employer regularly uses in carrying on their undertaking or activity; or

(ii) that the person from whom it is rented regularly uses in carrying on their undertaking or activity.

Exclusion: car 

(2)             Subsection (1) does not apply to a car.

Exclusion: private use 

(3)             A motor vehicle is not a work-related vehicle on any day on which the vehicle is available for the employee’s private use, except for private use that is— (a) travel to and from their home that is necessary in, and a condition of, their employment; or (b) other travel in the course of their employment during which the travel arises incidentally to the business use.


Paragraph (3) of s CX 28 is often overlooked.   It states that if the vehicle is available for private use (other than for travel from home to work or incidental travel) then it is not a work-related vehicle and it will be subject to FBT.  The exemption is actually quite narrow.   


Inland Revenue interprets s CX 28(3)(a) to mean an employee cannot use a vehicle for private use except for travel to and from their home where that travel has a direct or needed relationship with the employee’s employment; and is a requirement of that employee’s terms of employment.  So in your scenario, the shareholder-employee that runs the office would not be entitled to the work-related vehicle exemption.  We make this point explicitly at para [107] of Interpretation Statement IS 17/07 “FBT and Motor Vehicles”:  


For example, if a receptionist is given a vehicle to travel between home and work, the employer would not be entitled to the benefit of the private use exclusion in s CX 38(3)(a), because the travel to and from home is not necessary to the receptionist’s role. 


We have tried to clarify this aspect of the work-related vehicle exemption for taxpayers and their advisors.  Our Interpretation Statement IS 17/07 “FBT and Motor Vehicles”  explains the exemption in detail from para [66] onwards.  We have also made a video on the work-related vehicle exemption:


Hope this helps and happy to discuss this with you if you’d like. 


Kind regards

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