Motor Vehicle Tax Guide — FBT, Road User Charges, and Vehicle Deductions in NZ
the motor vehicle taxation in New Zealand. The guide covers the Fringe Benefit Tax (FBT) on the employer-provided vehicles, the Road User Charges (RUC) for the diesel vehicles, the vehicle expense deductions for the businesses, and the GST input tax claims.
FBT and Employer Vehicles
The employer-provided motor vehicles available for the private use are subject to the Fringe Benefit Tax (FBT). The FBT is calculated using the quarterly or the annual FBT return at the 49.25% rate on the taxable value of the vehicle benefit. The vehicle benefit value is based on the cost price of the vehicle (the 5% of the cost per quarter for the vehicles purchased, or the 9% of the tax value for the leased vehicles). The private use includes the travel between the home and the work, and the detours for the personal errands. The work-related vehicle exemption may apply if the private use is limited. See our FBT Guide → for the full FBT rules.
Vehicle Deductions and GST
The businesses may claim the vehicle expense deductions using the IRD kilometre rates (the 95 cents per km for the 2025-26 year for the first 14,000 km) or the actual costs method (the fuel, the maintenance, the insurance, the depreciation). The GST-registered businesses may claim the GST input tax on the vehicle purchase and the running costs, subject to the private use adjustment. The Road User Charges (RUC) apply to the diesel vehicles and the heavy vehicles — the RUC is paid per km of the distance travelled. The electric vehicles are currently exempt from the RUC but will be included from the 1 April 2026. See our Business Expenses Guide → for the deduction rules.