Section RD 31 — Income Tax Act 2007: Motor vehicle test period

RD 31 Motor vehicle test period Recording details for test period (1) To establish the value of the benefit provided through a motor vehicle being made available to an employee for their private use, an employer may choose to record the details of the use of the vehicle by the employee for a test period. Number used in calculations (2) The number of days on which a vehicle is available for an employee’s private use that is ascertained in the test period is the number used in the calculation in section RD 29(2) . For the calculation in section RD 29(4), the relevant number is the number of days ascertained in the test period multiplied by 4. Quarter or 3 months for test period (3) If FBT is paid quarterly or annually, the test period is a quarter. If FBT is paid on an income year basis, the test period is 3 consecutive months of an income year. Period showing pattern of use (4) The employer must— (a) choose a test period that shows, or is likely to show, a pattern of use of the motor vehicle by the employee that fairly represents the use of the vehicle by the employee over the whole of the applicable term; and (b) keep a record of the test period, including accurate details of the days in the period on which the vehicle is available for the employee’s private use. Work-related vehicles (5) In subsection (4), a day on which the vehicle is a work-related vehicle is treated as a day on which the vehicle is not available for private use. Term of 3 years (6) The number of days of availability for private use ascertained in the test period applies for a term of 3 years. The term starts, as applicable, as follows: (a) if FBT is paid quarterly, on the first day of the test period: (b) if FBT is paid on an annual basis, on the first day of the tax year in which the test period occurs: (c) if FBT is paid on an income year basis, on the first day of the income year in which the test period occurs. Reduction of term (7) The term referred to in subsection (6) is reduced if the number of days of actual private use of the motor vehicle is 20%, or more than 20%, higher than the number ascertained in the test period. In this case, the term ends on the last day of the applicable quarter, year, or income year. If the employer chooses to start another test period, the existing term ends just before the start of the new term. When test period no longer representative (8) If the Commissioner considers that the result ascertained in the test period does not, or does no longer, fairly represent the actual private use of the motor vehicle by the employee, the Commissioner may notify the employer that the term will end on a particular date. Following notification, the employer must not use that result again. Defined in this Act: Commissioner , employee , employer , FBT , income year , motor vehicle , notify , private use , quarter , tax year , work-related vehicle , Compare: 2004 No 35 s ND 1B(1)–(6)