When is travel between home and work subject to FBT?

In February 2025, Inland Revenue released an updated Interpretation Statement outlining when employer-provided travel by motor vehicle between home and work is considered a fringe benefit and subject to FBT.​

We’ve pulled together a summary of this statement to give you the crucial details on when the commute between home and work may be classified as a ‘fringe benefit’ and the key exceptions.​

We have a whole article on Fringe Benefit Tax, but in this context, if you have a work vehicle that is available for ‘private use’, then there is usually a fringe benefit.​

‘Private use’ includes not only travel that benefits you personally, such as driving to/from the supermarket, or driving to social engagements/activities, but also includes your daily commute between home and work.​

As a general rule, travel between your home and workplace is considered a personal expense.​

However, there are some exceptions.​

Even though the general rule says home-to-work travel is private, there are four specific situations where it's treated as "on work" travel and won't be subject to FBT.​

If you must use the vehicle to carry tools, instruments, or other essential work items that you need for work, both at home and at your workplace, and these items are too bulky, valuable, or sensitive to transport otherwise, then your travel is likely not private use. Your own transportation is considered "incidental" to moving the equipment.​

Example: A musician who transports bulky instruments between their home (where they practice) and a concert hall (where they perform) in an employer-provided vehicle, especially if the vehicle is only for this purpose.​

If your job inherently involves a lot of travel to different workplaces throughout the day, and your home is essentially your ‘base of operations’ then your travel from home to your first job, and from your last job back home, is considered "on work".​

Example: A community nurse who travels directly from their home to various patients' homes throughout a rural region, returning home at the end of the day. Their patient list constantly changes, and travel is essential to their duties.​

If you are required to respond to emergency calls from home, and your responsibility for the task begins before you leave home, then the travel to the emergency and back home is not private use.
Example: A person on-call for responding to and assisting with vehicle breakdowns.​

This is a high bar to meet. It means your home is genuinely a primary place where you must do your work because of the nature of the job itself, not just because you prefer to work from home.​

Factors considered include:​

Simply choosing to work from home or allowing your employees to (even to save rent) is generally not enough to make your home a "workplace" for FBT purposes if the job could be done entirely in an office (or location outside of the home).​

Example: A self-employed electrician, Sam, runs his business from home. He stores tools, equipment, and materials in his home garage and completes all his job scheduling, quoting, and invoicing from a dedicated home office. Each day, Sam drives from home directly to different customer sites to carry out electrical work.​

Sometimes, a small private detour during a work-related journey can be ignored. ​

The Commissioner considers a private detour to be minor or insignificant if it does not exceed both:​

Example: A plumber detours 1 km to the supermarket to grab lunch on their way from one job to the next. If the total journey is 20 km, this detour is 5% of the journey, making it minor or insignificant.​

Just taking a vehicle home for security reasons or to charge an electric vehicle (EV) generally does not make your home a workplace or mean the travel is not a private benefit. The act of transporting yourself between home and work is still a private purpose of the journey, and it's more than an ‘incidental’ benefit.​

There are also specific legal exclusions that can apply, meaning FBT won't be charged in certain situations, such as:​

For further information, you can access the whole 59-page Interpretation Station from Inland Revenue at https://www.taxtechnical.ird.govt.nz/interpretation-statements/2025/is-25-02.​