Car defined for fringe tax

Press, 30 March 1985, Page 6

Car defined for fringe tax

PA Wellington Fringe benefits tax details covering the definition of a motor-car were released by the Under-Secre-tary of Finance, Mr de Cleene, yesterday. Trade-related vehicles, such as vans and utilities, which have the employer’s name permanently on the vehicle, are exempt from the tax on those days where the only private use allowed by the employer is either incidental to business use or is for travel to and from home at the discretion of the employer. Motor-cars did not qualify for this exemption, irrespectivei of the purposes for

which they were used, Mr de Cleene said. The definition of motorcar in the fringe benefit legislation is “a motor vehicle (other than a motorcycle or moped or minibus) designed exclusively or principally for the carriage of persons; and includes a motor vehicle designed principally for the carriage of passengers but which has rear doors or collapsible rear seats.

“That does not include a motor vehicle used as a taxi.”

Mr de Cleene said there was no difficulty of interpretation in most cases. Some confusion had arisen over vehicles which

had a design enabling them to be manufactured as either a motor-car or a van. In some cases, stationwagons and certain sedan or saloon cars are designed so the inclusion of a rear seat enables them to be used as a motor-car, whereas the absence of the rear seat and the inclusion of decking, or other similar adaptation of a permanent nature, enables them to be sold and used as vans. Mr de Cleene said that the definition of “motorcar” in the fringe benefit tax legislation would exclude those dual purpose vehicles which were used as vans and which had either the rear seat permanently

removed from the vehicle or had the folding rear seat welded face down to the floor to form a permanent decking. Although those vehicles were excluded from the definition of motor-car, they were still required to meet the other tests which applied to work-related vehicles to be eligible for exemption from fringe benefit tax, Mr de Cleene said.

Vehicles such as station wagons which simply had the rear seat clipped or bolted to the floor would continue to be treated as motor-cars, irrespective of the purposes for which the vehicle was used, he said.