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It all sounds too good to be true but following changes to fringe benefit tax (FBT) rules last year our Auckland Tax and Human Resources teams have combined their expertise to establish a leading-edge Sustainable Commuter Scheme that benefits employers and their employees.
Time to read: 3 mins
They believe the scheme is a first in New Zealand. It includes:
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.
A well-constructed Sustainable Commuter Scheme offers many benefits to employers and employees. In short:
For employers
For employees
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.
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:
If you want to learn more, contact us today!
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