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Episode 3 – FBT and Motor Vehicles, Work-Related Vehicles

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

Visual:

Inland Revenue's logo displays. The title “FBT and Motor Vehicles, Part 3 – FBT and Motor Vehicles” appears. This is replaced by “Previously on Crossed Wires”. An image of the Crossed Wires premises appears along with pictures of Chris Cross and Veri Cross. The words “business travel exemption” and “emergency call exemption” appear. Chris’s car then drives on screen and signwriting appears on the car.

Audio:

Narrator

In our video “FBT and Motor Vehicle Exemptions” Chris and Veri Cross discovered there are some exemptions that apply to FBT.

Now they are wondering about signwriting and if that affects FBT.


Visual:

Chris’s car moves to the middle of the screen and starts flashing. A starburst saying “Whaddyareckon Trevor” appears.

Audio:

Narrator

So if Chris or Veri’s cars had signwriting on them, does that mean no FBT has to be paid?

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. The words “work-related vehicle” appear, along with a picture of Veri’s car with a big red cross through it.

Audio:

Trevor

Signwriting is relevant for a work-related vehicle.

This is a vehicle you need to do your job, but it doesn’t apply to cars (other than taxis).


Visual:

The debonair Trevor returns along with a green ute with the logo “Ducks-R-Us” on the driver’s door. The logo includes a picture of a yellow rubber-ducky.

Audio:

Narrator

Is that why you see so many utes and vans with signwriting?


Visual:

The tray of the ute becomes full of yellow rubber-duckys.

Audio:

Trevor

Maybe. To be a work-related vehicle, it needs to be designed to carry goods – or, not mainly designed to carry people.


Visual:

The ute drives off screen to be replaced by Chris’s car that is sign-written with “Crossed Wires Ltd”.

Audio:

Narrator

What about the signwriting you see on cars?


Visual:

Trevor sashays back onto screen alongside Chris’s sign-written car.

Audio:

Trevor

That could just be for advertising because they can’t escape FBT by having signwriting.


Visual:

Chris’s car drives off screen and unfortunately, Trevor also vanishes leaving just an image of Crossed Wires' premises.

Audio:

Narrator

Well, how do work-related vehicles work then?


Visual:

Trevor thankfully reappears, and so does a picture of the dour Garry. Garry seems very down-to-earth.

Audio:

Trevor

Garry, our installation specialist, is frequently out at client sites and needs a vehicle to do most of his job.


Visual:

Garry then disappears to be replaced by a picture of Garry’s double-cab ute. It is in the same fetching shade of blue as Trevor’s shirt.

Audio:

Trevor

We bought him a double-cab ute to use for work.


Visual:

Garry’s double-cab ute disappears and is replaced with a picture of a mobile phone ringing on a bedside table at night. Trevor remains on screen with his brooding dark eyes and goatee beard. The mobile phone is replaced by a picture of Garry’s house, somewhere near Whitby. Garry’s ute pulls up outside. Trevor fades away.

Audio:

Trevor

Because Garry is sometimes on call, and we don't have enough secure parking at work, he takes the ute home each night to store.


Visual:

Cuts back to the picture of Crossed Wires' premises.

Audio:

Narrator

If Garry doesn’t have permission to use the ute privately there's no FBT to pay, right?


Visual:

Trevor shimmers back on screen in his open-necked shirt. The scene cuts back to Garry’s house with his ute parked outside. The words “private use = FBT” appear. Trevor, Garry’s ute and the words then all depart leaving Garry’s house on screen.

Audio:

Trevor

It’s not quite that easy.

If Garry takes the ute home at the end of each day, that's private use and there'll be FBT to pay.


Visual:

Garry’s house is replaced by a map of the Wellington region which has a red dot moving from central Wellington up State Highway 1 towards Whitby. Garry’s ute drives across the screen.

Audio:

Narrator

But is it private use if Garry has to take the ute home because it can't be stored at work?


Visual:

Trevor’s smouldering good looks return to the screen outside Garry’s house. Garry’s ute pulls up. The words “work-related” appear on the screen only to be obliterated by a big red cross.

Audio:

Trevor

This is a common FBT misconception.

Requiring an employee to store a vehicle at home for security reasons doesn't make the journey from work to home “work-related”.


Visual:

The words “work-related” disappear and money bags appear on Garry’s ute. The money bags disappear and Garry’s ute drives off. A picture of the map reappears and the red dot proceeds from Whitby back to Wellington. The scene cuts back to Trevor and Garry’s house where the letters “FBT” appear only to get squashed by a big red cross.

Audio:

Trevor

The employee is still getting a private benefit.

This is where the work-related vehicle comes in.

If you have a work-related vehicle, you can take it from home to work and back again without paying FBT.


Visual:

Scene cuts back to Crossed Wires' premises.

Audio:

Narrator

Ok, so what is a work-related vehicle?


Visual:

Trevor glides in from the left of the screen along with the words “work-related vehicle”. The words “not a car” then appear along with Chris’s car which gets pounded by a big red cross. Chris’s car drives off and Garry’s ute drives in. It has a Crossed Wires logo on the driver’s door which includes a picture of a couple of crossed wires. The words “permanent and prominent signwriting” appear. These words are then replaced by the phrase “essential for work” which gets a big green tick. The background then changes to Garry’s house and a document that is clearly a letter is superimposed. The background changes back to Crossed Wires' premises and the words “private use” appear only to be flattened by a big red cross.

Audio:

Trevor

Generally, a work-related vehicle:

  • can’t be a car,
  • must have signwriting with the business name permanently and prominently displayed,
  • must be necessary for carrying out the employee’s role if it is stored at their home, and this must be required in writing, and
  • can't be used privately.

Visual:

The picture of Garry’s double cab ute outside Crossed Wires' premises expands to fill the screen.

Audio:

Narrator

Ok, I get all that, but is Garry’s double cab ute OK?


Visual:

Trevor cheerfully returns and Garry’s ute shrinks down to normal size.

Audio:

Trevor

Yes. It’s not mainly designed to carry people, so it's ok.


Visual:

Garry’s double cab ute is parked outside Crossed Wires' premises. The Crossed Wires logo disappears from the driver’s door replaced by personalised number plates reading “X-WIRE”.

Audio:

Narrator

Do you have to get signwriting? I’ve seen vehicles with personalised plates – is that good enough?


Visual:

Garry’s double cab ute remains parked outside Crossed Wires' premises with the personalised plates. Trevor waltzes back on screen accompanied by a big red cross completely obscuring the personalised plates. The cross and personalised plates disappear and are replaced with the Crossed Wires logo on the driver’s door. The logo is then removed and replaced with a logo on a magnetic sign on the driver’s door. This gets the big red cross treatment.

Audio:

Trevor

Probably not. It needs to be prominent and it must be the logo or name that the business trades under.

It has also got to be permanent – so you can’t use magnetic signs either.


Visual:

Garry’s double cab ute is parked outside Crossed Wires' premises. The document that is clearly a letter is superimposed again. Trevor returns, grinning impishly.

Audio:

Narrator

Do you put the restrictions on private use in a letter to the employee?

Trevor

You can, or you can put them into the employee’s employment agreement.


Visual:

Garry’s double cab ute is parked outside his house. The words “private use” appear pursued by a big red cross. Trevor materialises and the background reverts to Crossed Wires' premises. Garry’s ute drives away.

Audio:

Narrator

And then once Garry gets the car home, he’s not allowed to use it privately.

Trevor

That's correct. It pays to keep checks to make sure Garry isn’t using the ute every now and again – this way Crossed Wires can show everyone takes the arrangement seriously.

That can come in handy if IRD comes knocking.


Visual:

The background is Crossed Wires' premises. The background changes to a shopping mall car park, complete with cars. The Ducks-R-Us ute drives right through the carpark, returning towing a boat.

Audio:

Narrator

I know you said you can’t use the vehicle privately, but I see a lot of vehicles with signwriting at the supermarket or towing boats in the weekends. Is there a rule for that?


Visual:

Trevor reappears outside Crossed Wires' premises. He is still wearing his sharply pressed blue shirt. Once again the words “private use” appear only to be obscured by the big red cross. These disappear and are replaced by a picture of a calendar month where a couple of the days have big green ticks placed on them.

Audio:

Trevor

That’s a very good question. For the work-related vehicle exemption you can’t use the vehicle privately.

You can however choose to pay FBT for some of the time and then you can use the vehicle privately.


Visual:

Trevor is with Garry’s double cab ute outside Garry’s house. The back of the ute is full of Garry’s model boats. The ute drives off to the local boat pond where a rubber ducky floats alone with Garry’s ute in the background. Garry’s model boats drive around the rubber ducky while the monthly calendar showing two green ticks is superimposed over the action.

Audio:

Trevor

With Garry, he asked if he could use the ute during weekends for transporting his model boats.

Veri and Chris agreed to pay FBT for Saturdays and Sundays so Garry is free to use the vehicle during weekends now.

That means we pay FBT for 2 days of each week.


Visual:

Returning to Crossed Wires' premises, the scene changes to the mobile phone on the bedside table. The words “emergency call exemption” appear.

Audio:

Narrator

What happens if Garry gets called out in the weekend?

Trevor

That’s another great question. Crossed Wires can claim the emergency call exemption so they don’t have to pay FBT on Garry’s ute for that day.


Visual:

The words “work-related vehicle” appear across the top of the picture of Crossed Wires' premises. The words “signwriting”, “not a car” and “essential for work” appear, each getting a big green tick. The words “FBT” then appear and are squashed by a big red cross. The words “private use” then appear and are also flattened by a big red cross.

Audio:

Trevor

So remember, a work-related vehicle must have signwriting and cannot be a car. The employee must need the vehicle to do their job, and they can take it home and no FBT applies.

However, FBT will apply for any day they're allowed to use it privately.


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: interpretation).