However there are a number of issues that should be addressed to give the document greater coverage and clarity. These we set out below:

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1 26 May 2017 Public Consultation c/ - Manager, Public Rulings Inland Revenue PO Box 2198 Wellington Dear Jane PUB00249 Fringe Benefit Tax Motor Vehicles Thank you for the opportunity to comment on the above draft item. This interpretation statement (IS) will be a useful guide for SMEs and their advisors in determining their fringe benefit obligations for motor vehicles made available to employees for private use. It is timely that this statement updates and consolidates all IR statements on FBT and motor vehicles. The rolling example adds to the effectiveness of the statement and illustrates the situations where the provision of a motor vehicle is subject to FBT. However there are a number of issues that should be addressed to give the document greater coverage and clarity. These we set out below: Definition of made available in the case of business-related travel The example on page 12 considers the situation where Chris and Veri attend a businessrelated conference in Sydney. Chris s car is parked at the airport for three days while they are away. We agree with the conclusion in the example that there is no FBT payable because CWL has required Chris to go to Sydney. However, this example raises an issue as to the position where the trip is of lesser duration. Level1, Carlaw Park, Nicholls Lane, Parnell, ABN (CA ANZ). Formed in Australia. Liability limited by a scheme approved under Professional Standards Legislation. Members of CA ANZ are not liable for the debts and liabilities of CA ANZ.

2 For example, the conference is two days. Chris leaves from home on the morning of the first day, collects Veri and drives to the airport, where he parks the car. Chris and Veri fly to Sydney. They return the following night. Chris drives Veri home and returns to his house with the car. Should FBT be payable in that situation? Would the answer be different if Veri had taken a taxi to and from the airport and Chris had only driven himself? We believe the IS should also address these two situations. Identification prominently and permanently displayed The example on page 19 includes two situations when a personalised number plate does not satisfy the form of identification requirement. In the first example, the licence plate is in essence a personal one and, in the second example, the plate ( XWIRES ) is not the form of identification regularly used by CWL in carrying out its business. This raises the issue as to when a personalised plate may satisfy the form of identification requirement. We believe it would be possible for a personalised plate that did identify the business to qualify as a form of identification e.g. CWL in this example. In our view, the licence plate is the most readily identifiable part of a motor vehicle and a licence plate that clearly identifies the business would meet the requirement. The IS should address this specific situation. Emergency call out Paragraph 159 discussed the meaning of emergency call and section CX 6(5). We do not agree with the analysis that the exemption for an emergency is always limited to the day of departure from the employee s home. As an example, where an employee departs their home in a vehicle before the end of one FBT day and arrives at the emergency call site on the same FBT day, but does not depart from the client site until the next FBT day, we consider the vehicle would be exempt from FBT for both days. It would not be logical for only one of the days to be exempt in that case. Emergency call is defined in section CX 34 as meaning a visit that an employee is required to make.. Visit is defined at en.oxforddictionaries.com as having several meanings, including: ABN (CA ANZ).

3 Go to see (someone or something) for a specific purpose, such as to give or receive professional advice. While this definition indicates that the presence is temporary, in our view, visit is not the same as arrive. We believe there may be occasions where the emergency call does cover two FBT days. Sale and buy-back arrangements The situation discussed at paragraph 243 would be enhanced by including an example of where a vehicle is purchased by an associate. Calculation of FBT example The draft IS includes an example on page 48 where Chris pays for the motor vehicle fringe benefit by having the FBT deducted from his current account. We understand this arrangement is common, but that the calculation can be confusing for businesses. We believe the IS should give an example of the calculation, including the GST treatment. Changing business environment It is becoming more common for employees and businesses to make greater use of mobile technology. This may mean there is less need for employees to visit the employer s physical office. We understand from our members that employment arrangements exist where the vehicle is, in effect, the employee s office (and that this may occur notwithstanding that they are an employee and their employer may have a physical office). Such employees generally do not have desks allocated to them and operate using mobile devices with cloud based applications for all interactions with their employer and their clients. The Commissioner needs to consider the FBT implications of this changing employment model as the standard FBT settings are neither appropriate nor practicable for these employment arrangements. In our view, this type of arrangement raises issues with the current rules, including: Is the vehicle ever available for private use? ABN (CA ANZ).

4 Could the situation arise where there was no FBT because the employee is prohibited from using the vehicle for private use? Would the presence of a home office make a difference, or is the set-up of the vehicle as an office space sufficient? FBT rates for Electric Vehicles Another change to the business environment is the prevalence of electric vehicles (EVs).. In speaking with our members we understand that the current FBT settings that apply to conventional cars are not necessarily fair or appropriate for those taxpayers who are investing in EVs. It would appear that the current FBT rules have a negative tax/ financial impact that discourages business investment in EVs. In particular: The 20% of cost price fringe benefit valuation formula is designed to approximate the running costs of a vehicle. This figure is excessive for an EV, which has a higher cost price and lower running costs. The cost of an EV is higher than the cost of the corresponding model of a conventional vehicle. However there is no increase in benefit to the employee. The benefit to the employee is the same whether the vehicle is electric or not. Our members are of the view that applying the current (cost price) FBT formula to EVs will discourage businesses from investing in EVs. If the Government is considering an incentive package to promote the use of EVs, and wishes to encourage their use as fleet vehicles, it may be worthwhile to consider the FBT rate on EVs. FBT compliance We understand from speaking to our members that compliance with FBT can be low. One of our members have suggested that there be further public comment from IR regarding the common misconceptions about FBT and motor vehicles (such as those referred to in paragraph 15, but we believe there are many others). We believe this could assist with FBT compliance. We would be happy to discuss this point further with you. ABN (CA ANZ).

5 We would also be happy to discuss our submission more generally. If you have any queries please contact us. Yours sincerely Stephen J Rutherford CA Senior Tax Advocate Jolayne Trim Senior Tax Advocate T: T: E: stephen.rutherford@caanz.com E: jolayne.trim@caanz.com ABN (CA ANZ).