Calculating the taxable value of motor vehicles

how is taxable value calculated

Introduction

There are several options for calculating a motor vehicle's taxable value. Find out here:

  • which option to use
  • how each option is calculated
  • how to determine the value of pooled vehicles
  • how to calculate the taxable value of private use of a motor vehicle.

Options for calculating the taxable value

How to calculate each option

  • subtract any trade-in value from the cost price, or
  • add expense items such as registration.

When calculating the taxable value the percentage is:

  • 5% a quarter, or
  • 20% if you file annual or income year FBT returns.

Tax book value

This is the GST-inclusive tax value, ie the value reflected in the financial accounts including any depreciation claimed.

This option acknowledges that motor vehicles predominantly devalue over time and where a vehicle is owned for more than five years, an employer's FBT liability will decrease.

When calculating the taxable value the percentage is:

  • 9% a quarter, or
  • 36% if you file annual or

    income year FBT returns.

A minimum value of $8,333 will apply to any owned or leased vehicle regardless of the value reflected in the financial accounts.

Leased or rented vehicles

If you rent or lease the vehicle you:

  • need to ask the lessor the cost price or book value depending on the method being used
  • must keep a copy of the lease agreement.
9 to 5 and "flip flop" leases

Several changes have been made to ensure these types of lease are subject to FBT.

The definition of private use of a motor vehicle has been extended. Private use now includes when the person who makes the vehicle available to the employee:

  • owns the vehicle
  • leases or rents the vehicle
  • has the right to use the vehicle under an agreement or arrangement (see note below) with the employee or a person associated with the employee.

Note

When there is an agreement or an arrangement transferring a right to use a motor vehicle to the employer, the periods when:

Source: www.ird.govt.nz

Category: Taxes

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