The "ute" - Kiwi icon or tax dodge


Recently, there has been a large volume of media attention being directed to the 'ute' and it has become a focal point of protest action against the Government.

The Government announced the "Clean Car Discount" scheme in June, which from 1 July until 31 December 2021 will see purchasers of imported electric vehicles receive a rebate of $8,625 for new vehicles, and $3,450 for used vehicles. Purchases of new and used hybrid vehicles will also be eligible for a rebate of $5,750 and $2,300, respectively.

There are various additional requirements – for example, the vehicle must have a purchase price of less than $80,000, a safety rating of at least three stars and must be registered for the first time in New Zealand between 1 July 2021 and 31 December 2021.

From 2022, subject to legislation being passed, it is proposed that the amount of the rebate will be based on the CO2 emissions of the vehicle. The rebate will be funded by the introduction of a fee imposed on high emission vehicles (such as some utes) from 2022. It is proposed that a maximum fee of $5,175 and $2,875 will be imposed on new and used imported vehicles, respectively. The exact fee will be based on the CO2 emissions of the vehicle. The policy will only apply to new and used cars arriving in New Zealand from 1 January 2022 – hence the second-hand market of existing high emission vehicles will not be impacted.

The Government has also confirmed that the value for FBT purposes for employers purchasing vehicles that are available for private use by employees, will be either net of the rebate (if an electric or hybrid vehicle), or gross of the fee (if a high-emission vehicle).

Speaking of FBT, the ute has received another blow…

If a 'company vehicle' is provided for home to work travel, FBT is likely to apply unless it is a "work-related vehicle". In order to qualify as a "work-related vehicle":

·         the employer's name or logo must be permanently and predominantly displayed; and

·         the vehicle must not be principally designed to exclusively or mainly carry passengers.

If a vehicle does qualify as a work-related vehicle, FBT will not apply to a particular day if it cannot be used privately, except for home to work travel that is necessary in and a condition of employment; or other travel that is incidental to business use.

Because sedans and hatchbacks are designed to carry people they don't qualify as work-related vehicles unless they are specifically modified to qualify. Anecdotally, this might explain the high number of sign-written utes on NZ's roads…

It now appears Inland Revenue may be directed to crack down on the application of FBT to utes and enforce the view that they may not qualify as a work-related vehicle.


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