UpFront DIY – FBT

It has been suggested that, in the interests of reducing compliance problems, employees should pay their own fringe benefit tax on vehicles – not their employers.
In submission to the IRD, independent fleet consulting firm StratCon Fleet Partners says the way the current system is run effectively condones unofficial perks, development of circumvention processes and situation where small vehicle owners subsidise those with larger vehicles.
IRD could, it says, create fairer and simpler FBT regime by transferring liability from employers to employees and relating the tax to vehicle and engine size, age, and retail value instead of using one-size-fits-all standard.
If FBT is about taxing an individual for benefits received in lieu of cash, then why not add the value of that benefit to salary or wages and tax accordingly, suggests StratCon partner Graeme Perry. This would eliminate confusion over ownership and the possibility of tax avoidance.
In its submission, the company notes that the cost of complying with FBT is rising and because only handful of companies can capture FBT data electronically, tracking fleet movements becomes “time-consuming and onerous” task.