Latest news with #DavidCarrigan
1News
17-06-2025
- Automotive
- 1News
IRD warns about misunderstanding fringe benefit tax
Inland Revenue says it wants to clear up misunderstanding about the effect of proposed changes to fringe benefit tax (FBT), particularly when it comes to double cab utes. There was a warning this week that farmers buying expensive utes at Fieldays could be in for a shock if the FBT rules changed in line with proposals released earlier this year. Federated Farmers has also warned of a "ute tax 2.0". But Inland Revenue deputy commissioner, policy, David Carrigan, said there were misunderstandings about the tax, including a myth that utes had been FBT-free. "When it comes to double cab utes, these are treated no differently to any other vehicle. Unless the use of the vehicle meets all the requirements for an exemption from FBT, then a double cab ute is, and always has been, subject to FBT. That is the current law," Carrigan said. ADVERTISEMENT "Work-related vehicles are only exempt from FBT if they meet certain requirements. This includes double cab utes." The morning's headlines in 90 seconds, including Auckland's supermarket fire, Trump's threat to Iran, and how a smart watch could make you fitter. (Source: 1News) At the moment, work vehicles such as utes are only exempt from FBT on days when they are used for essential work purposes. He said what was proposed was not a change to that treatment, but to remove the necessity to count days when a vehicle was or was not available for private use. "The idea is to simplify FBT, not create additional obligations. If a business - including a farm - is not currently liable for FBT on a vehicle, then it's unlikely they would become liable for FBT under any proposals taken forward." He said the aim of the FBT proposals was not to increase revenue but to reduce compliance costs of FBT. "The government has not made any final decisions in relation to potential changes to the FBT regime and Ministers are currently considering the feedback received from submitters on the Inland Revenue issues paper with a view to refining those proposals." ADVERTISEMENT Deloitte tax partner Robyn Walker agreed there was "fake news" circulating about the FBT rules. She said there had historically been concerns about low levels of compliance with FBT. "This review essentially concluded that a lack of compliance with the existing laws (and lack of compliance by Inland Revenue) had the potential to erode the integrity of the tax system. "Essentially, if taxpayers think it is okay to not comply with FBT rules, they'll also start not complying with other tax laws." She said the idea that utes were completely exempt from FBT was long-standing but had never been the case. But under the proposals released earlier this year, a vehicle used for work purposes and generally only available for home to work travel and travelling to different worksites would be "category three" vehicle with a 0% rate for FBT purposes. "Under the proposals, if there was occasional additional private use of the vehicle, this would be ignored." ADVERTISEMENT She said the changes also opened this category up to other vehicles such as small cars and electric vehicles. "There is a proposed rule that vehicles assigned to shareholder employees would not be able to be exempted from FBT if the vehicle has a cost of $80,000-plus. "However, for FBT purposes, you only look at the cost of the vehicle and you ignore any 'business accessories'. "There is a false narrative that if a ute is purchased and it is fitted with work-related gadgets that increase the total cost to above $80,000 that the vehicle is automatically subject to full FBT. This is incorrect."
RNZ News
17-06-2025
- Automotive
- RNZ News
IRD warns about misunderstanding fringe benefit tax
At the moment, work vehicles such as utes are only exempt from FBT on days when they are used for essential work purposes. Photo: Screenshot / Unsplash / RNZ Inland Revenue says it wants to clear up misunderstanding about the effect of proposed changes to fringe benefit tax (FBT), particularly when it comes to double cab utes. There was a warning this week that farmers buying expensive utes at Fieldays could be in for a shock if the FBT rules changed in line with proposals released earlier this year. But Inland Revenue deputy commissioner, policy, David Carrigan, said there were misunderstandings about the tax - including a myth that utes had been FBT-free. "When it comes to double cab utes, these are treated no differently to any other vehicle. Unless the use of the vehicle meets all the requirements for an exemption from FBT, then a double cab ute is, and always has been, subject to FBT. That is the current law," Carrigan said. "Work-related vehicles are only exempt from FBT if they meet certain requirements. This includes double cab utes." At the moment, work vehicles such as utes are only exempt from FBT on days when they are used for essential work purposes. He said what was proposed was not a change to that treatment, but to remove the necessity to count days when a vehicle was or was not available for private use. "The idea is to simplify FBT, not create additional obligations. If a business - including a farm - is not currently liable for FBT on a vehicle then it's unlikely they would become liable for FBT under any proposals taken forward." He said the aim of the FBT proposals was not to increase revenue but to reduce compliance costs of FBT. "The government has not made any final decisions in relation to potential changes to the FBT regime and Ministers are currently considering the feedback received from submitters on the Inland Revenue issues paper with a view to refining those proposals." Deloitte tax partner Robyn Walker. Photo: Supplied / Deloitte Deloitte tax partner Robyn Walker agreed there was "fake news" circulating about the FBT rules. She said there had historically been concerns about low levels of compliance with FBT. "This review essentially concluded that a lack of compliance with the existing laws (and lack of compliance by Inland Revenue) had the potential to erode the integrity of the tax system. "Essentially, if taxpayers think it is okay to not comply with FBT rules, they'll also start not complying with other tax laws." She said the idea that utes were completely exempt from FBT was long-standing but had never been the case. But under the proposals released earlier this year, a vehicle used for work purposes and generally only available for home to work travel and travelling to different worksites would be "category three" vehicle with a zero percent rate for FBT purposes. "Under the proposals, if there was occasional additional private use of the vehicle, this would be ignored." She said the changes also opened this category up to other vehicles such as small cars and electric vehicles. "There is a proposed rule that vehicles assigned to shareholder employees would not be able to be exempted from FBT if the vehicle has a cost of $80,000-plus. "However, for FBT purposes, you only look at the cost of the vehicle and you ignore any 'business accessories'. "There is a false narrative that if a ute is purchased and it is fitted with work-related gadgets that increase the total cost to above $80,000 that the vehicle is automatically subject to full FBT. This is incorrect." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Scoop
17-06-2025
- Automotive
- Scoop
No Change To FBT Rules For Double Cab Utes
Inland Revenue has moved to clear up a misunderstanding by some commentors about the effect of new Fringe Benefit Tax (FBT) proposals, particularly those for double cab utes. Inland Revenue Deputy Commissioner (Policy) David Carrigan says it's a myth that utes have always been FBT free. 'When it comes to double cab utes, these are treated no differently to any other vehicle. Unless the use of the vehicle meets all the requirements for an exemption from FBT, then a double cab ute is, and always has been, subject to FBT. That is the current law,' David Carrigan says. 'Work-related vehicles are only exempt from FBT if they meet certain requirements. This includes double cab utes.' FBT exemptions A vehicle, including a ute, is exempt from FBT only on days it is used for essential work purposes as defined on our website Employer provided motor vehicles for private use. David Carrigan says 'vehicles that are used partly for business and partly privately are subject to FBT now on the days the vehicles are used for private use. 'The proposals do not change that treatment but remove the necessity to count days where a vehicle is or is not available for private use. 'The idea is to simplify FBT, not create additional obligations. If a business – including a farm – is not currently liable for FBT on a vehicle then it's unlikely they would become liable for FBT under any proposals taken forward. Consultation 'Inland Revenue has undertaken public consultation on FBT proposals, including for motor vehicles, after a lot of work with the tax community to understand businesses' frustration with the current FBT rules. 'The aim of the proposals is not to increase revenue but rather focus on reducing the compliance costs of FBT by moving to a close enough is good enough approach rather than strict day counts of when a vehicle is and is not used for private use, ignoring any incidental use, such as stopping to pick up groceries on returning from business trip. No decisions 'The government has not made any final decisions in relation to potential changes to the FBT regime and Ministers are currently considering the feedback received from submitters on the Inland Revenue issues paper with a view to refining those proposals. 'The Government is considering feedback from consultation and any changes would progress through the normal legislative process, giving people another opportunity to make submissions,' David Carrigan says.
