Clean, green, rebate scheme…
Have you bought your new Electric Vehicle yet to take advantage of the Governments Clean Car Discount Scheme?
In case you’ve been living under a rock and have not heard about the regime, purchasers of new and used zero and low emission vehicles which are first registered in New Zealand between 1st July 2021 and 31st December 2021, will qualify for a rebate. That is unless the purchase price of the vehicle (including GST and on-road costs) exceeds $80,000, or the Rightcar website specifies a less than three-star safety rating for the vehicle.
The rebate for zero emission vehicles is $8,625 for a new vehicle and $3,450 for a used model, while low emission (plug-in hybrids) new vehicles qualify for $5,750, with a $2,300 rebate for those used versions.
However clearly I’m not just writing this article in an attempt to encourage you to clean up your image by dangling the rebate carrots in front of you. Instead, most things in my world come back to tax, and this article is no different. If your vehicle is to be used for business purposes, and someone is giving you money to assist you in buying it (attempting to make it more affordable, in this instance in comparison to petrol and diesel alternatives), then questions surrounding income tax, GST and FBT implications are likely to arise.
In this regard, Inland Revenue has kindly issued some guidance, which not only applies to these rebates, but also to those persons who post 1st January 2022, will incur a fee due to their vehicles high emissions.
From an income tax perspective, the rebate/fee is neither assessable income nor a deductible expense. However the amount does affect your depreciation calculations for the vehicle, reducing the vehicles cost base in respect of a rebate received and conversely increasing it where a fee has been paid.
Similarly, where FBT is to be paid on the vehicle, the cost base used to determine the taxable value of the benefit will be reduced by the rebate amount, and increased where a fee is incurred.
Finally, from a GST perspective, if the person is GST registered and receives a clean car rebate for a vehicle which is used in the taxable activity being carried on, then under the rules which apply in relation to the receipt of Government grants, the amount received is a deemed supply, and the registered person must return GST on the rebate in their next GST return.
Note that the above rules also have application to a lessor who acquires the vehicle to lease to others under an operating lease. However where the lease is a finance lease, the base cost of the vehicle will be determined under the financial arrangement rules in the usual way.