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FBT and Motor Vehicles

Inland Revenue has been asked to confirm whether FBT applies to motor vehicles during the Level 4 lockdown period (“Level 4”).

An FBT liability arises if a motor vehicle is “made available” to an employee for their private use. Some taxpayers have suggested that during Level 4, a motor vehicle is not “made available” for an employee’s private use because the only private use permitted is local travel to access essential services.

The Commissioner’s view is that a motor vehicle will attract FBT in the usual way during Level 4. The Commissioner acknowledges that opportunities for an employee to use a vehicle for private use have been restricted under Level 4, to accessing essential services or working in an essential business. However, the test is whether the vehicle has been “made available” for private use, not whether any private use has occurred. The case law confirms that a vehicle is “made available” to an employee when they have access to the vehicle and permission to use it for private purposes. Actual use is irrelevant for FBT purposes.

Therefore, if a vehicle is “made available” to an employee for their private use an FBT liability will arise and the Level 4 days must be included in the FBT calculation for the relevant period.

There is no legislative scope for the Commissioner to exercise her discretion in these circumstances. The Government has considered whether to introduce a temporary exemption to cover the Level 4 period but has decided against this. Consistent with our earlier advice, taxpayers should continue to file their FBT returns in the usual way, including any FBT payable on motor vehicles that were “made available” to employees for their private use during Level 4.

For further details on how the FBT rules apply to motor vehicles please refer to the Commissioner’s Interpretation Statement IS 17/07: Fringe benefit tax – motor vehicles

IS 17/07: Fringe benefit tax – motor vehicles

Pool vehicles

The Commissioner understands that some employees were required to take home pool vehicles during Level 4. If these vehicles are subject to a genuine private use restriction, no FBT is payable during Level 4. However, FBT is payable on the day the vehicle was brought home and the day it was returned to work. This is because travel between home and work is “private use” under sCX36. The position may be different if the employee’s home is also a workplace (see below).

Home as a place of work

As mentioned above, travel between home and work will usually be “private use” of a motor vehicle. However, the courts have held that no private benefit arises from travel between home and work if the home is also used as a workplace. In these circumstances, travel between home and work is not “private use” of a motor vehicle.

The Commissioner understands that during Level 4, many employees have been required to work from home. This is because in many cases their place of work is closed. In the unique circumstances of Level 4, the Commissioner will accept that there are sound business reasons arising from the nature of the work for the work to be performed at home (and therefore the need to travel from work to home and back again). This means that home to work travel (such as driving the pool vehicle home before Level 4 and returning it when the employee can go back to work) is not subject to FBT. Taxpayers need to ensure that the facts of their case support this approach (for example, their employee must be actually working from home) before concluding that there is no FBT. There also needs to be a genuine private use restriction in place. If the employee is free to use the vehicle for private purposes, then FBT will be payable.


There may be some days where an FBT liability does not arise because an exemption applies. For example, if the vehicle is used for an emergency call, or if the employee is absent from home with the vehicle for at least 24 hours. These exemptions are outlined in more detail in IS 17/07 and there are several requirements that must be satisfied before the exemptions apply.

Fringe benefit tax

Last updated: 28 Apr 2021
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