Source: Federated Farmers
Federated Farmers is calling on Revenue Minister Simon Watts to urgently rule out changes to Fringe Benefit Tax (FBT) that would cost every farmer thousands of dollars each year.
Inland Revenue has proposed major changes to the way FBT applies to utes, which are common and essential work tools for most farmers across New Zealand.
“This could very quickly become a ‘Ute Tax 2.0’ and it seems to be being pushed through by stealth,” says Federated Farmers transport spokesperson Mark Hooper.
“Farmers will be incredibly concerned that the government are consulting on new rules that could add thousands of dollars of additional tax payments each year.
“This would be a huge cost for farmers, tradies and other productive New Zealanders and unfairly punish the legitimate use of these work vehicles.
“The previous Government’s Ute Tax was bad enough, but at least that was a one-off cost. These new FBT charges would be annual and cost farmers an arm and a leg each year.”
Under the proposal, utes costing over $80,000 and provided to farm owners or other major shareholders would be taxed at 100% of their value (capped at $80,000), even if used almost exclusively for farm work.
That would result in an annual tax bill of between $5,500 and $8,200.
Everyone else, like employees and sharemilkers, would be taxed on 35% of the ute’s value. That’s around $1,800 to $2,700 annually for a $50,000 vehicle.
“The old system at least allowed people to keep logbooks and potentially pay less tax if the private use was genuinely small,” Hooper says.
“Now the Government wants to scrap all that and slap a flat tax on nearly every farm ute in the country, even if the ute almost never leaves the farm except to drive home.”
Federated Farmers says the proposal completely ignores the reality of how farmers use their vehicles, often crossing public roads between blocks or driving into town for supplies at Farmlands or the vet.
“These are not Queen Street vanity purchases. A four-wheel drive ute is a core piece of equipment that farmers need to do their job each day,” Hooper says.
“If it leaves the farm to get fencing gear or pick something up from the vet, that’s still work. But under these new rules, it would be taxed as private use.”
The IRD consultation period closed on 5 May, but Federated Farmers says the lack of clear direction from the Minister is causing anxiety in the rural sector.
“The recently announced Investment Boost tax deduction was incredibly well received by farmers and has generated real economic activity, particularly at Fieldays,” Hooper says.
“Unfortunately, all that good work risks being undone if the Government is giving with one hand and taking with the other.
“We understand this is just a proposal and no final decisions have been made, but we’re calling on Simon Watts to move quickly and take these potential FBT changes off the table.
“There’s no way the Government should be introducing taxes that would unfairly punish farmers for driving legitimate work vehicles.”
Federated Farmers is calling on Revenue Minister Simon Watts to categorically rule out the Ute Tax 2.0.
