Tax Bill Arrives

With only two months before the election, it is unlikely that this will be passed by this Government and will need to be passed by the next Government which will make it subject to change. Assuming it does pass in something like its current form the changes are expected to apply from 1 April 2027.

Some of the key changes in the Bill are:

No more day counting and availability calculations

Currently, employers generally need to determine the number of days a vehicle is available for private use, often requiring detailed records and logbooks. The Bill removes this approach and replaces it with vehicle usage categories.

New category-based private use percentages

Employers will select the category that best reflects how a vehicle is used, with predetermined percentages applied to calculate the taxable benefit. Categories range from:

• 100% private use
• Mainly business use with some private use (35%)
• Farming vehicles (35%)
• Business use with home-to-work travel only (20%)
• Certain project or multi-site vehicles (0%)
• Pool vehicles with no private use (0%)

Work-related vehicle exemption replaced

The current "work-related vehicle" concept is largely removed and replaced with the new categorisation framework, including requirements for some vehicles to be permanently branded.

Branded vehicle requirements

To access lower-private-use categories, vehicles generally need prominent permanent branding. Exceptions apply for:

• Existing vehicles acquired before the Bill is introduced
• Certain farming businesses.
• Situations where Inland Revenue grants a waiver.

New vehicle valuation rates

Vehicle valuation percentages are updated and differentiated by vehicle type:

Emergency vehicle exemption retained

Emergency vehicles used by organisations such as Police, Fire and Emergency NZ and ambulance services remain exempt from FBT where qualifying conditions are met. This is slightly narrower than the old emergency vehicle rules.

We will provide more detail as we review the Bill.