Personal use of company vehicle

Forums › Off topic › Personal use of company vehicle - What's it worth

gregmcc

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#240396 6-Sep-2018 07:41

Currently have "limited personal use of company vehicle" in my contract, this (to me) means trips down to the local shop, going in to the city etc.

I would also assume it is not for going away on extended trips/holidays.

Anyway employer wants to change this to "no personal use", but has not indicated any relative change in pay for this change, So what do you think? What should I ask for by way of a pay rise for loss of this benefit?

Vehicle is sign-written 4 door Ute, around 3 years old.

Senecio

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#2084679 6-Sep-2018 07:46

You should be able to put a dollar figure on it pretty easily.

You'll have to buy another car for personal use. How much to finance, tax, insure, run and maintain a vehicle for a year? I had the option of a company car (all personal use allowed) or a $22,500 car allowance. I took the allowance as I already had my own vehicle.

RunningMan

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#2084688 6-Sep-2018 08:05

No personal use means it shouldn't be taken home - you'll need a way of getting to work to pick it up each day.

Suckerpunch

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#2084697 6-Sep-2018 08:28

The following govt website should help.

https://www.ird.govt.nz/business-income-tax/expenses/mileage-rates/emp-deductions-allowances-mileage.html

Work out how many km's of limited personal use you have been doing in the vehicle, then apply the cent per km to get a $$ figure.

kryptonjohn

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#2084699 6-Sep-2018 08:30

Senecio:

You should be able to put a dollar figure on it pretty easily.

You'll have to buy another car for personal use. How much to finance, tax, insure, run and maintain a vehicle for a year? I had the option of a company car (all personal use allowed) or a $22,500 car allowance. I took the allowance as I already had my own vehicle.

But that gets you an unlimited use car so not equivalent to losing the limited use car.

I would just add up the km driven on personal use per annum and multiply by the standard IRD mileage rate (about 70c/km).

I bet the employer is saving quite a lot of FBT here.

Suckerpunch

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#2084700 6-Sep-2018 08:34

"I would just add up the km driven on personal use per annum and multiply by the standard IRD mileage rate (about 70c/km)."

Pretty sure that's what I said... (and included a link to the IRD mileage rate)

"Work out how many km's of limited personal use you have been doing in the vehicle, then apply the cent per km to get a $$ figure."

wellygary

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#2084712 6-Sep-2018 09:31

gregmcc:

Currently have "limited personal use of company vehicle" in my contract, this (to me) means trips down to the local shop, going in to the city etc.

I would also assume it is not for going away on extended trips/holidays.

Anyway employer wants to change this to "no personal use", but has not indicated any relative change in pay for this change, So what do you think? What should I ask for by way of a pay rise for loss of this benefit?

Vehicle is sign-written 4 door Ute, around 3 years old.

Ask them what value they are declaring to IRD for FBT on the personal use....

https://www.ird.govt.nz/fringe-benefit-tax/fbt-types/fbt-motor-vehicles/motor-vehicle-fbt.html

dacraka

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#2085079 6-Sep-2018 14:45

Tell them you don't want to change that benefit as it's already locked in your contract and simply just keep having that benefit.

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Varkk

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#2085107 6-Sep-2018 15:49

wellygary:

gregmcc:

Currently have "limited personal use of company vehicle" in my contract, this (to me) means trips down to the local shop, going in to the city etc.

I would also assume it is not for going away on extended trips/holidays.

Anyway employer wants to change this to "no personal use", but has not indicated any relative change in pay for this change, So what do you think? What should I ask for by way of a pay rise for loss of this benefit?

Vehicle is sign-written 4 door Ute, around 3 years old.

Ask them what value they are declaring to IRD for FBT on the personal use....

https://www.ird.govt.nz/fringe-benefit-tax/fbt-types/fbt-motor-vehicles/motor-vehicle-fbt.html

Probably not declaring it and their accountant wants them to clean it up before IRD gets involved.

sen8or

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#2085108 6-Sep-2018 15:49

Really depends on the terms of your employment contract. It is not uncommon for them to contain a clause along the lines that any personal use of a company vehicle does not count in your salary package and future changes to company policy may not result in compensation for loss of personal use. If it doesn't contain such a clause, then they can't arbitrarily change your terms of employment without agreement.

A 3 year old ute is likely to have a FBT value somewhere around $50k (required to register at cost price not book value), with a quarterly FBT bill of about $1000 on that. Additional costs beyond the FBT component really are most likely quite moderate (small amount for running costs) but other fixed costs such as insurance and rego won't change at all. If you said all up, limited use of a company car was costing your employer about $5-600 per month, that'd probably be pretty close.

Then it comes down to whether or not you can get a contribution towards your own personal car. If you don't own one and would have to go and buy a car, that obviously makes the proposition less appealing for you, but if you went for $250-300 per month, that might be realistic.

DaveB

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#2085177 6-Sep-2018 19:13

sen8tor above might well be correct. Many companies have tried to provide a vehicle based on limited usage to try an circumnavigate the huge FBT fees and provide a tangible benefit to employees. I understand that IRD are about to clamp down on this and your company may possibly be trying to minimize this. Check your employment contract closely. Usually work related vehicles should only be available to employees (free of FBT) provided that they are on call outside of usual business hours.

I hope you get it resolved fairly, but don't expect a financial windfall such as has been suggested in a few earlier replies.

skewt

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#2085197 6-Sep-2018 20:14

Mines currently listed in my contract/package as being worth around $12,850

Goosey

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#2085306 7-Sep-2018 06:22

As somone else said "no personal use" means perhaps leave the car at work or at the least you park it at your home (for free, FFS) :-)

With all the cars Ive had, usually the companies price them as 12-15k value in the 'total salary package'. I.e. thats about the same you would spend in a year on fuel and maint.

Some other employers may treat dfferently and include an assumption on the value of the car itself as well, but that isnt a good way to calculate as part of total salary package IMHO....instead Ive seen car allowances of around 15-25k instead (to get your own car).

Also, if they are lease cars then they would likley have a maximum km's rule placed on them by the lease company (if its a cheap contract).

Therefore any KMs over this affect the value when it goes off lease. Perhaps that is the motivation of your employer?

mentalinc

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#2085307 7-Sep-2018 06:54

Sounds familiar have a read of this:

https://www.geekzone.co.nz/forums.asp?forumid=48&topicid=196367

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