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Episode 2 - FBT and Motor Vehicles, Exemptions

This is a transcript for the second episode of the Crossed Wires Trilogy on FBT and motor vehicles. It is about exemptions from FBT. This video is for businesses learning how FBT applies to motor vehicle benefits provided to employees.

Visual: 

Inland Revenue's logo displays. The title “Fringe Benefit Tax (FBT) and Motor Vehicles, Part 2 – The Two Exemptions” appears. This is replaced by the words “Previously on Crossed Wires”. An image of the Crossed Wires premises appears along with pictures of Chris Cross and Veri Cross. Chris’s car then drives on screen and the words “available FBT” appear. Chris’s car drives off and Veri’s car drives on. Veri has the sporty red model. The word “available” appears and is obscured by a big red cross. The words “FBT” then appear and suffer the same big red cross fate. Veri’s car drives off.

Audio:

Narrator

In our previous video "Introduction to FBT and Motor Vehicles", Chris and Veri Cross discovered that because Chris’s company car is available for his private use, they need to pay fringe benefit tax.

Veri doesn't need to use her company car privately and doesn't have permission to do so, which means there is no FBT to pay.


Visual:

Chris and Veri disappear and Chris drives his car on screen in front of Crossed Wires' premises. Money bags appear on Chris’s car. The money bags disappear one by one.

Audio:

Narrator

The question is… Is there any way to reduce the FBT on Chris’s car?


Visual:

A starburst saying “Whaddyareckon Trevor” appears.

Audio:

Crowd

Whaddyareckon Trevor?


Visual:

The devilishly handsome Trevor appears at the side of the screen. He exudes both confidence and authority. You know Trevor is not going to put you wrong. The picture of Crossed Wires' premises remains in the background. A picture of a calendar month appears and big green ticks are scattered across the days. Trevor disappears.

Audio:

Trevor

FBT is calculated on the days the vehicle is available for private use.


Visual:

A big red cross appears on one of the days on the monthly calendar.

Audio:

Narrator

So does that mean if Chris doesn’t USE the car, there's no FBT to pay for that day?


Visual:

Trevor reappears at the side of the screen where the monthly calendar is still superimposed over Crossed Wires' premises. The big green ticks have disappeared leaving the solitary big red cross on one day of the monthly calendar. The calendar and big red cross disappear. The word “available” appears and is greeted with a big green tick. The word “use” then appears and is given a much frostier reception with a big red cross.

Audio:

Trevor

No. Chris's private use of the car isn't restricted – it is available for private use every day. It doesn’t matter if Chris actually uses the car.

But there are some exemptions that could apply.


Visual:

Chris is driving down a leafy metropolitan street, interestingly sitting in the passenger’s seat of the car. He is stopped at a pedestrian crossing when his car is rear-ended by what looks remarkably like Veri’s car. His car lurches forward, but luckily no one is injured. The monthly calendar is superimposed and four big red crosses assign themselves to days of the month. The calendar and big red crosses disappear. The scene cuts back to Crossed Wires' premises.

Audio:

Narrator

A few weeks ago Chris’s car got rear-ended and he was without the car for a whole week. Does FBT need to be paid for that week?


Visual:

A starburst saying “Whaddyareckon Trevor” appears.

Audio:

Crowd

Whaddyareckon Trevor?


Visual:

Trevor’s smiling face reappears in front of Crossed Wires' premises. A tow-truck drives across the screen and returns towing Chris’s car. A picture of a person assessing a damaged car appears. The word “access” appears but is rudely squashed by a big red cross. The word “FBT” also appears and gets the big red cross treatment too. The words and picture disappear and are replaced by Crossed Wires' premises. A document that is clearly a letter is superimposed. The letter disappears followed by Trevor.

Audio:

Trevor

No. The test is whether the car was available to Chris.

Because Crossed Wires took the car to the panelbeaters, Chris didn’t have access to the vehicle that week, so no FBT has to be paid for those days.

I keep a record of these things for when we file our FBT return.


Visual:

The word “exemptions” appears over the background of Crossed Wires' premises. Three question marks appear above it. The items disappear and Trevor emerges, resplendent in his blue open-necked shirt. The words “emergency call exemption” appear and are then replaced with the words “business travel exemption”. Trevor and the words disappear.

Audio:

Narrator

What other exemptions might apply?

Trevor

The ones that may apply for Chris are the emergency call exemption and the business travel exemption.

Narrator

How do they work?


Visual:

Trevor reappears in front of Crossed Wires' premises. The background scene cuts to a picture of a mobile phone ringing on a bedside table at night. This is replaced by a picture of a country road at night with Chris’s car driving along the road. Interestingly, Chris is still sitting in the passenger’s seat. Chris drives off screen and is replaced with the words “essential to Crossed Wires' business”. The background picture changes back to Crossed Wires' premises. The words get a big green tick. The words “emergency call” also appear. The words “essential to Crossed Wires' business” then disappear and are replaced with “FBT” – which gets a big red cross.

Audio:

Trevor

In Crossed Wires’ business, Chris sometimes gets called out outside of office hours when a computer system goes down.

Provided this call-out is essential to Crossed Wires or a client’s business, it is an “emergency call”.

When this happens, that day doesn’t count for FBT.


Visual:

The monthly calendar is superimposed over Crossed Wires' premises, with a big red cross appearing on the 18th day of the month. A picture of a school ghosts in and out through the background. Trevor appears, looking as confident as ever.

Audio:

Narrator

So you exclude the whole day even if Chris has already used the car privately?

Trevor

That’s right. The whole day is excluded.


Visual:

Trevor and the big red cross disappear from the monthly calendar. The calendar is then covered in big green ticks. The calendar then zooms off and is replaced by the words “on-call?”. Trevor saunters back, along with a big red cross that obscures the words “on-call?”. The words “called out” appear along with a big green tick.

Audio:

Narrator

Can’t Crossed Wires claim this every day – because Chris is always on call?

Trevor

It doesn’t work like that. You only get the exemption when Chris is ACTUALLY called out.


Visual:

The words “business travel exemption” appear over the background of Crossed Wires' premises.

Audio:

Narrator

Tell me more about the business travel exemption.


Visual:

Trevor reappears, looking calm and relaxed in front of Crossed Wires' premises. A map of the North Island and part of the South Island appears, and a big red dot moves from Wellington up the east coast to Napier. The map disappears and is replaced by the monthly calendar. Three of the days receive big green ticks. The word “FBT” then appears, only to be obliterated by a big red cross.

Audio:

Trevor

It works the same way as the other exemption but applies when Chris travels on business.

Last week Chris went to a work conference up in Napier.

He ended up being away for 3 days so those 3 days don’t count for FBT.


Visual:

The calendar month that is superimposed over Crossed Wires' premises gets hit with three big red crosses. The calendar and crosses disappear.

Audio:

Narrator

Ok, so Crossed Wires can take out the whole 3 days?


Visual:

Trevor leaps back on-screen, this time with a picture of a gentle rolling hill complete with vineyard. Chris appears driving his car, once again from the passenger seat. A sign saying “wine tours” appears. Chris drives off. The background returns to Crossed Wires' premises.

Audio:

Trevor

That’s right. Even if Chris uses the car privately while he’s away, each day he is away is excluded.


Visual:

Trevor disappears. Chris’s car comes on screen. Chris’s car drives off. The word “exemptions” appears followed by the words “no access”, “emergency call” and “business travel”.

Audio:

Trevor

So remember, if an employee has access to a work vehicle, and permission to use it privately, FBT applies, even if they don’t actually use it.

You can get an exemption from FBT for the days an employee:

  • doesn't have access to the vehicle,
  • is called out for an emergency, or
  • is using it for business travel.

Visual:

The web address for the Inland Revenue page on FBT and directions for finding Interpretation Statement IS 17/07 on the website are shown.

Audio:

Trevor

For more information about FBT go to www.ird.govt.nz/fbt

You can check out the whole Crossed Wires story in Interpretation Statement IS 17/07 at www.ird.govt.nz (search keyword: interpretations).