Editorial: Sensible move

Inland Revenue’s proposal was to make major changes to the way FBT applies to utes, which are common and essential work tools for most farmers across New Zealand.

As Federated Farmers rightly points out this could very quickly become a ‘Ute Tax 2.0’ and it seems to be being pushed through by stealth.

Farmers made it clear that they were in no mood to pay thousands of dollars of additional tax payments each year. This would have come as a huge cost for farmers, tradies and other productive New Zealanders and unfairly punish the legitimate use of these work vehicles.

The Coalition Government heard the message, confirming the proposal to amend FBT charged against farm utes has been canned.

While the previous Government’s so called “ute tax” was a one-off cost, the latest proposal could have seen utes costing more than $80,000 purchased by a farm business for farmers or shareholders taxed at 100% of their value (capped at $80,000) even if they were used almost exclusively for farm use.

The result would potentially result in an estimated tax burden of between $5,500 and $8,200 per annum. Meanwhile, employees and sharemilkers supplied vehicles, under the proposals, would be liable for a tax liability of $1,800 to $2,700 annually on a $50,000 value vehicle.

Common sense has prevailed and the Government deciding that it would not be hitting any Kiwis with new tax burdens on utes-full stop-and that included changes to FBT changes.

The Government must be commended for listening to the rural sector. Farmers, already facing an avalanche of regulations and taxes, can breathe a sigh of relief.