By Federated Farmers
Copyright farmersweekly
Reading Time: 2 minutes
Federated Farmers is welcoming confirmation that proposed changes to Fringe Benefit Tax on farm utes will not go ahead – saving rural New Zealand a fortune.
Earlier this year, Inland Revenue floated new rules that would have effectively slapped a ‘Ute Tax 2.0’ on farmers, tradies and other productive Kiwis.
Federated Farmers finance and tax spokesperson Mark Hooper says the financial hit would have been massive.
“Owners or major shareholders faced annual tax bills of $5500 to $8200 for utes valued over $80,000,” Hooper says.
“Employees and sharemilkers with dual-purpose uteswould have been looking at $1800 to $2700 a year for a $50,000 ute.
“These vehicles are essential tools, not luxury toys, and the proposal completely ignored how they’re actually used on farms.”
The original proposal would have hit farmers with a 100% Fringe Benefit Tax (FBT) rate on any ute worth more than $80,000, no matter how much it was used for work.
It also targeted dual-purpose utes used for both business and unrestricted personal use, which meant many farm utes were caught in the net, since families often rely on them throughout the week and on public holidays as well as weekends.
Even utes used almost entirely on the farm – vehicles that should have been fully exempt from FBT – faced extra hurdles around compulsory sign-writing and strict ‘work site only’ rules.
Federated Farmers moved quickly to raise the alarm, labelling the proposal ‘Ute Tax 2.0’ and warning it was unfair, unaffordable and disconnected from the reality of farm life.
The organisation called on Revenue Minister Simon Watts to rule the changes out, stressing that farmers already face significant costs and compliance pressures.
Now, the Government’s Taxation (Annual Rates for 2025−26, Compliance Simplification, and Remedial Measures) Bill makes no mention of changes to motor vehicle use.
“This is a major win for rural New Zealand and a direct result of strong advocacy from Federated Farmers,” Hooper says.
“It’s a great outcome for our members and for common sense – and it will save farmers an absolute bomb each year.
“The previous Government’s ute tax was bad enough as a one-off cost, but this new version would have been annual, ongoing and punishing.
“We’re pleased that Minister Watts has listened to our concerns on this.”
Hooper says the decision shows the value of Federated Farmers’ advocacy.
“Our rural members told us this was a priority issue, and we’ve delivered.
“We’ll always stand up for practical, fair policy that reflects the day-to-day reality of farming.
“The cost we’ve saved farmers more than covers the cost of a Federated Farmers membership.”
Federated Farmers, New Zealand’s leading independent rural advocacy organisation, has established a news and insights partnership with AgriHQ, the country’s leading rural publisher, to give the farmers of New Zealand a more informed, united and stronger voice. Federated Farmers news and commentary appears each week in its own section of the Farmers Weekly print edition and online.
