The Clean Car Standard applies to you if you are a light vehicle importer. It aims to reduce CO2 (carbon) emissions by encouraging a greater supply of low and no-emission vehicle imports to New Zealand.
From 1 December 2022, if you are a light vehicle importer you must have a CO2 account and use the Clean Car Standard (CCS) system, operated by Waka Kotahi (NZ Transport Agency), to manage vehicle imports and meet the Clean Car Standard.
For vehicles that exceed the annual target, you will receive a positive CCS CO2 value that results in a credit. Vehicles that don’t meet the target receive a negative value which results in a charge. Credits can be used to offset charges.
Clean Car Standard (Waka Kotahi website)
Goods and services tax (GST)
Charges and credits that come from the CCS system are not subject to GST. The charge is in the nature of a fine or penalty and is not consideration for a supply.
However, you may provide a service that involves the CCS in some way, and in these cases, GST may need to be applied on the overall supply. You can see an example of this at the bottom of the page.
Charging GST on credits traded with other account holders
Credits that you earn can be used to offset charges before a final debit cost is calculated. You can only use credits within the CCS system and they cannot be cashed in or sold back to Waka Kotahi.
However, you can trade credits with other CCS CO2 account holders. If a price is paid for transferred credits, this would be subject to GST as consideration for a service.
The CCS charge is not the type of fine or penalty where deductions are denied (for example, for breaking the law). It would generally be considered expenditure that comes from carrying out your business activity and is therefore deductible for income tax purposes.
Clean Car Discount scheme
While the Clean Car Standard applies to importers, there's a related scheme that applies to car owners. The Clean Car Discount scheme was introduced to make it more affordable to buy low CO2 emission vehicles.
An importer provides an end-to-end service to their customers which includes sourcing, purchasing, importation, entry certification, registration and getting a warrant of fitness for a vehicle. The importer takes care of all costs and fees associated with these activities and charges the customer a fee which includes all costs plus a mark-up service fee.
The importer is providing one overall service and the total amount charged to the customer is subject to GST. The CCS charge is imposed directly on importers (not on the end user) and is just one of the related costs to be recovered in the total service fee charged to customers.