It was used mainly for work — visiting jobs, hauling materials, and checking progress. But when the ute went home with him each night, Sarah was surprised to learn it triggered Fringe Benefit Tax (FBT) in New Zealand.
This is a common trap for Australian small business owners operating across the Tasman. What looks like a standard work vehicle in Australia can have very different tax consequences under New Zealand rules.
Let’s break down when a ute is exempt from FBT — and when it isn’t.
When Does FBT Apply to a Company Vehicle?
In New Zealand, FBT applies when a business vehicle is available for an employee’s private use — and that includes simply taking it home.
Many business owners assume utes and vans are automatically exempt from FBT because they’re used for work. Unfortunately, that’s not the case. Whether a vehicle is subject to FBT depends on how it’s used, what it looks like, and whether private use is genuinely restricted.
What Qualifies as a ‘Work-Related Vehicle’?
A ute or van can be exempt from FBT if it meets all the conditions to be classed as a work-related vehicle. To qualify, it must:
- Display your business branding permanently and prominently.
The vehicle must clearly show your business name or logo — a small decal or personalised number plate doesn’t count. - Be designed primarily for business use.
Most double-cab utes can qualify, as they’re designed to carry both goods and passengers. - Not be available for private use.
Private use generally includes any personal travel, such as commuting between home and work, except in very limited circumstances (for example, if it’s required as part of the job or incidental to business use).
Home-to-Work Travel Is Usually Private Use
Even if the employee drives directly from home to a worksite, that travel is usually treated as private. Only in very specific cases — such as for emergency call-outs or when the employee’s home is formally designated as a workplace — is it considered business use.
It’s important to note that doing general administration, paperwork, or emails from home doesn’t make the home a workplace for FBT purposes. Unless the home is formally part of the employee’s job base, travel between home and work remains private use.
So, if your employee takes the ute home each day, even for convenience, the vehicle is likely to attract FBT unless restrictions and records are in place.
Practical Tips for Australian Business Owners
If your Australian business operates in New Zealand and provides vehicles to employees, it’s worth reviewing your policies to stay compliant. Here’s how:
- Ensure branding is visible. Have your company name or logo permanently displayed on the vehicle.
- Restrict private use. Set out clear conditions in employment agreements or company policies.
- Keep simple records. Note when vehicles are used for work versus private purposes.
These straightforward steps can help avoid unexpected FBT liabilities and keep your business on the right side of Inland Revenue.
Get Help from New Zealand Tax Experts
At NZ Tax Accountants Pty Ltd, we specialise in helping Australian small businesses meet their New Zealand tax obligations. Our team of NZ-qualified accountants understands both sides of the Tasman — so we can guide you through the practical realities of FBT, GST, and other cross-border tax matters.
If you provide company vehicles in New Zealand or want to confirm your compliance, we’re here to help.
Contact us today to speak with one of our New Zealand tax specialists.
The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.