Company Motor Vehicles - Latest FBT Changes
When a Company vehicle is available for private use
it is subject to Fringe Benefit Tax (FBT). FBT is
calculated on 20% of the original cost of the vehicle
with the FBT tax rate generally being 49.25%.
From 1 April 2017 the IRD has modified the rules so that when a close Company purchases a vehicle they have the option to keep a log book and claim vehicle expenses based on an apportionment of business/private use. Certain rules apply here:
• This method can only be used when the only (fringe) benefits supplied by the Company is at maximum 2 vehicles to shareholder-employees. This means that if other fringe benefits are provided to employees or vehicles are provided to non shareholders this method cannot be used.
• The vehicle must be purchased after 1 April 2017 to use the new rules.
• A vehicle log book must be kept for a minimum of 90 days, once every 3 years to determine the business portion of expenses.
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