Section RD 28 — Income Tax Act 2007: Private use of motor vehicle: calculation methods

RD 28 Private use of motor vehicle: calculation methods What this section does (1) This section limits the way an employer may use a method for calculating the value of the benefit that they provide to an employee by making a motor vehicle available for the employee’s private use. Choosing method in first return (2) When a person first files a return relating to a vehicle for the purposes of this section, they may calculate the value of the benefit using either of the valuation methods set out in schedule 5 (Fringe benefit values for motor vehicles). Using method in first return (3) The person must use the method chosen in the first return referred to in subsection (2) in calculating the value of the benefit for the length of time— (a) starting after the end of the period of the first return; and (b) continuing to the earliest of the following dates: (i) the date of the disposal of the vehicle: (ii) the date on which the vehicle ceases to be leased by the employer or an associated person without a consecutive or successive lease of the vehicle by them: (iii) the date that is 5 years after start of the period of the first return. Returns after 5 years (4) In a return relating to the vehicle for a period beginning 5 years or more after the start of the period of the first return, the person may calculate the value of the benefit using either of the valuation methods set out in schedule 5 . Cost price valuation method (5) Despite subsections (3) and (4), the person must apply schedule 5 , clause 1 or 2, using the cost price valuation method if— (a) the vehicle is owned, leased, or rented by the employer or an associated person; and (b) the employer or the associated person owned, leased, or rented the vehicle— (i) during the period of the first return, if the period begins before 1 April 2006: (ii) before 1 April 2006. Exception: vehicle not subject to arrangement (6) Subsection (5) does not apply if a first return for the vehicle is for a period that starts on or after 1 April 2006 and the vehicle is not the subject of an agreement or arrangement referred to in section CX 7 (Employer or associated person treated as having right to use vehicle under arrangement). Exception: 5 years after first return (7) Subsection (5) does not apply if the person owns the vehicle and a period of 5 years or more since the start of the period of the first return has elapsed. Defined in this Act: arrangement , associated person , employee , employer , lease , motor vehicle , private use , Compare: 2004 No 35 s ND 1A(1)–(1D)