They believe the scheme is a first in New Zealand. It includes: 

• Significant savings for those travelling to and from work using public transport, bikes or scooters.
• Assisting employers to pass on a significant benefit for little cost.
• Helping employers achieve ESG targets and sustainability commitments.

The background

Last year Parliament made FBT changes to provide a more neutral tax outcome between active or more environmentally-friendly forms of transport (e.g. bikes, electric scooters) and the use of cars where the employer provides these. Inland Revenue felt these changes would provide health benefits, help reduce congestion and reduce carbon emissions.

The changes mean that effective from 1 April 2023, employers no longer have to pay FBT for providing their employees with a bicycle, an electric bicycle, a push-powered scooter, an electric scooter and/or any other vehicle declared under Section 168A of the Land Transport Act 1998 (to be a mobility device or not a motor vehicle). This is on the proviso that the main purpose for the vehicle is for the employee to travel between their home and place of work.

In a similar vein, FBT exemptions also extend to employer-subsidised public transport provided the main purpose of that transport is to travel between home and work.

Benefits

A well-constructed Sustainable Commuter Scheme offers many benefits to employers and employees. In short:

 For employers 

• A key initiative to include in their ESG Strategy by supporting public transport and alternative ways for their employees to commute to work.
• Tangible evidence of a commitment to sustainability which appeals to current and potential employees.
• Positive branding in the market place.
• Assisting employees with reducing the costs of travel to and from work during a period of high inflation and rising living costs.
• Demonstrate a high level of commitment to employees, which can be achieved at little cost – it is affordable. 

For employees 

• Reduced costs in travelling to and from work (savings could be in excess of 40%).
• Feeling aligned with the organisation’s commitment to sustainability.
• Supporting their own commitment to the environment.
• Health benefits in cycling.
• Potentially faster commuting times.

Our methodology

Our Sustainable Commuter Scheme methodology enables eligible employees toown a bike/scooter after a fixed period or access significantly cheaper public transport. Employees do have to commit to certain undertakings with the employer and understand the implications of any salary sacrifice arrangements on KiwiSaver and annual leave calculations. However, the benefits outweigh any minor or temporary effect in these other areas.

Want to know more about our Sustainable Commuter Scheme?

Our Auckland office is committed to assisting employers in their ESG journey and also in attracting and retaining staff. The FBT changes do provide a unique opportunity for employers. To help employers on this journey we can: 

• Develop your Sustainable Commuter Policy.
• Provide draft communication to your employees.
• Provide draft agreements that cover different scenarios.
• Establish draft calculations to assist employees in determining their level of savings.
• Provide bespoke tax advice to your organisation.
• Review other employee benefits provided and/or review the treatment of motor vehicles to ensure the most tax effective approach is taken.

If you want to learn more, contact us today!