These changes aren’t set in stone yet, but here’s what’s being talked about:
Company cars
Heavier vehicles included: The weight limit for vehicles attracting FBT might go up to 4500kg.
No more “book value” switch after five years: Currently, after five years you can base FBT on the vehicle’s book value, which lowers the tax. That option could be scrapped.
Fuel-based valuation: A new way of calculating FBT could be introduced that considers what kind of fuel your car uses.
Several tax changes are being proposed relating to company cars.
Regular revaluations: Instead of using the original purchase price forever, the car might need to be revalued every four years.
New tax rates based on vehicle type: Instead of 20% of the GST-inclusive cost, the FBT rate could change to:
More tailored tax rules depending on use:
One big catch: If you’re a shareholder-employee in a closely held company (owning 25%+ of the shares), and the company car costs $80,000 or more, you’ll automatically pay 100% FBT, no exceptions. They say it’s too tricky to monitor actual usage in those cases.
Other perks (unclassified benefits)
One option being considered is if you give an unclassified benefit that’s not part of someone’s pay and it costs less than $200 for that benefit, it wouldn’t be taxed under FBT regardless of the amounts of any other unclassified benefits to that employee or others. There will be anti avoidance rules.
Entertainment expenses
Entertainment costs (like staff functions or client dinners) might end up being taxed as fringe benefits.
No decision yet
Nothing’s final yet. These are just proposals, and the final rules could look different. But if you’re doing any planning, it’s good to know where things might be heading.
