Inland Revenue has recently released draft guidance (https://www.taxtechnical.ird.govt.nz/consultations/2024/pub00453) to clarify how current FBT rules apply to home-to-work travel. This update is essential, especially since any potential changes may still be years away.
Here are some key takeaways from the draft guidance:
- Home-to-work travel is generally considered private. Unless a statutory exemption applies (like the work-related vehicle exemption), this travel can trigger FBT for the employee.
2. Four key exceptions to FBT on home-to-work travel have been established:
- Necessary transportation of essential work equipment.
- Itinerant work requiring travel as part of job duties.
- Emergency response from home where responsibility starts before leaving.
- Having a home that qualifies as a workplace, which must meet specific criteria.
3. The exemptions are not easy to meet. For instance:
- Equipment must genuinely necessitate a vehicle for transport due to its size or sensitivity.
- Just working from home doesn’t automatically create a workplace exemption.
- Significant business-related activities must occur at home for it to qualify as a workplace.
With Inland Revenue intensifying its focus on compliance, now is the perfect time for employers to review their FBT practices. Ensuring adherence to these rules and understanding the nuances of the exemptions is crucial.
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