The NZ government is helping businesses support a shift to healthier transport modes by removing fringe benefit tax on bikes, e-bikes, and scooters provided to employees for commuting. However, employers face significant compliance and regulatory challenges if planning to facilitate this benefit internally, Workride is here to help. Workride removes employer headaches, by ensuring compliance through NZ’s only approved scheme, and efficiently managing the administration for participating employees.

Want to read up on the fringe benefit exemption? - Legislation link here

Want to read up on IRD’s commentary on this? (Page 77-88) - Tax bulletin link here

Workride delivers the best benefit for employees while safeguarding employers and directors from risks. By externalizing Health & Safety, Consumer Guarantees Act (CGA), and CCCFA obligations to Workride, we ensure full compliance and minimise exposure, letting employers confidently offer this benefit without worry.

Employees gain all the protections of the CGA through Workride and can easily insure their ride under standard contents policies due to their "legal responsibility" of their chosen equipment during Workride’s 12-month lease period. This structure gives employees their full rights and peace of mind while keeping employers safe and protected. It’s a win-win for everyone.

Background on how other approaches fall short, but not limited to:

1. Employer-Owned Equipment:

   • Tax Complications: Employer ownership classifies the ride as CAPEX instead of OPEX, leading to mismatched depreciation rates and tax liabilities at the end of 12 months.
     

   • Health & Safety Risks: Employer-owned equipment introduces insurmountable safety risks, as the business becomes liable for all incidents involving the equipment.
     

   • CGA Issues: Employees lose key protections under the Consumer Guarantees Act, as the employer is treated as a business supplier, creating dissatisfaction and potential legal exposure.
     

2. Employee Ownership from Day One:

   • Loss of Protection: Immediate ownership transfers all leverage to the employee, leaving the employer unable to recover costs if recovery payments are missed.
     

   • Legal Liabilities: Employers face exposure to CGA and Fair Trading Act claims, as they become the "supplier" of the equipment, responsible for warranties and potential disputes.
     

   • Insurance Limitations: Employers would need to update their liability insurance policies to account for risks associated with employee ownership. However, these updates can come with increased premiums and may still leave employers exposed to gaps in coverage.
     

   • Regulatory Risks: In cases of payment default, salary sacrifice arrangements could fall under CCCFA rules through cost recovery. Employers could then need to be registered as financial service providers, comply with disclosure requirements, and bear regulatory risks.
     

Why Workride is the Solution:
Workride's lease structure eliminates these risks, ensuring employers recoup full costs before ownership is transferred. By externalizing all legal, safety, and compliance obligations, Workride provides a seamless, and safe way to empower employees with this valuable benefit. No other option offers this level of protection and simplicity for employers.

Read more here about Workride’s protection for employers.

The journey of Workride over the past year has been marked by collaboration with leading New Zealand councils, organisations, agencies, and businesses, all aiming to develop New Zealand’s ride-to-work benefit scheme.

A key milestone was the 18-month comprehensive review conducted with NZ’s top tax consultants and Inland Revenue, ultimately resulting in multiple binding rulings that provide the tax and legal foundation for Workride, New Zealand’s ride-to-work benefit Program. This development ensures that participating employers can offer Workride with confidence, knowing they are compliant with legal and tax regulations.

Workride, New Zealand’s ride-to-work benefit scheme’s IRD binding ruling link

Most contents insurance policies cover items that you or your family own or are legally responsible for. This can include items in your possession through arrangements like a 12-month consumer lease from a service provider. These policies generally define "contents" as:

"Household goods and personal effects that you or your family own or are legally responsible for."

Under this definition, a leased bike would typically be covered, as you are legally responsible for it during the lease period. Additionally, many contents policies provide coverage for items temporarily away from your home, ensuring protection for leased items like a bike when in transit or stored elsewhere. Always refer to your specific policy wording for confirmation.

Workride strongly encourages employees to obtain adequate cover for their ride to safeguard against damage or theft. Employees should simply notify their contents insurance provider about the replacement value of their ride.

If an employee exits the organisation before completing their salary sacrifice agreement, Workride’s program ensures your organisation is not left financially exposed.

Because Workride retains legal ownership of the equipment throughout the 12-month lease period, your organisation’s financial outlay is protected by an asset-backed structure. This protection is a core advantage of using Workride over traditional loan or reimbursement-style benefit programs.

Our resolution process is built to ensure full cost recovery and eliminate administrative burden for employers:

Workride’s 3-Step Resolution Process

1. Educate & Engage
Workride initiates contact with the employee immediately upon notification of early departure. We clearly outline the obligations of the employee under the signed salary sacrifice agreement and provide options for repayment. In most instances, this results in a direct resolution where the employee agrees to repay the outstanding amount via personal payment.

2. Reassign or Repurpose the Equipment
If direct repayment is not achieved, Workride will initiate recovery of the equipment—made possible due to our continued ownership. Once recovered, the ride benefit can be:

• Reassigned to a new employee who assumes the remaining term and payments

• Repurposed internally for use by the organisation This flexibility ensures the original investment is preserved and the value of the benefit is not lost.

3. Reimburse & Recover
In cases where reassignment or repurposing is not feasible, Workride may sell the recovered equipment and use the proceeds to reimburse your organisation for the remaining balance ensuring your organisation is made financially whole.

Read more here about Workride’s protection for employers.

Prior to the lease period ending, Workride will directly contact the individual to discuss the “Next Steps” options regarding their ride equipment ownership. The initial lease allows for the Next Steps to be actioned, enabling a gifting option from Workride to the individual of the ride equipment after 12 months. Workride charges no fees or additional costs when offering the Next step options, these include:

Next Steps Deed (Gift): This option gives the ability for the individual to keep their ride equipment as a gift from Workride. Allowing the transition from legal possession to full ownership, giving employees the ability to permanently keep their bike, e-bike, or scooter.

Returning the Equipment: Alternatively, employees have the choice to return their ride to a predetermined Workride location. Our team then takes responsibility for the equipment, whether it involves recycling, repurposing, or donating it in line with our sustainability commitments

Running your own benefit scheme may seem appealing, but the insurmountable risks, complexity, and administrative burdens make it impossible to provide the same benefit, and would expose the business and directors to significant risks. Workride ensures full tax compliance and legal protection, handling all complexities and administration at no cost, letting your business focus on its core activities.

Here is why choosing Workride is beneficial through compliance with multiple acts:

Employment Relations Act 2000:
Ensures all employee/employer relations align with legal standards, especially when drafting salary sacrifice documentation and early termination processes.

Income Tax Act 2007:
Covers exemptions and constraints on how value is transferred to the employee, either as income (PAYE) or a non-cash benefit (FBT). Sections BG1 and GA1 address general anti-avoidance rules.

Goods and Services Tax Act 1985:
Considers GST implications when the employer provides services to the employee.

Public Finance Act 1989:
Limits the spending and borrowing abilities of Crown Agencies, affecting their use of employee benefit programs.

Crown Entities Act 2004:
Sets constraints on Crown Entities' spending abilities when procuring employee benefits.

Credit Contract and Consumer Finance Act 2003:
Outlines how service providers interact with consumers, including required considerations and disclosures when offering financial services. Providers must be certified and registered on the Financial Services Provider Register.

Privacy Act 2020:
Regulates the protection, storage, and disposal of personal information.

Fair Trading Act 1986:
Ensures business practices are fair and transparent, which is crucial when managing employee benefit programs.

Consumer Guarantees Act 1993:
Provides automatic guarantees to consumers, ensuring benefits meet quality and reliability standards.

Wages Protection Act 1983:
Ensures lawful and consented wage deductions, vital for implementing a salary sacrifice scheme.

Health and Safety at Work Act 2015:
Requires that employees and contractors are given the highest level of protection from workplace health and safety risks, both physical and mental, as far as is reasonably practicable.

By choosing Workride, you can offer a valuable employee benefit without the headache of managing compliance and administration, and removing risk to the business and directors.

For the best advice tailored to your unique circumstances, we recommend contacting your accountant. They can provide specialized guidance and help develop a strategy that enables you to maximize this benefit effectively.

The Workride Benefit Scheme operates using a 'salary sacrifice' system. When an employee opts to forgo a part of their salary for a Workride-approved benefit, this deduction is made from their pre-tax income. As a result, the employee ends up paying less in PAYE, Kiwisaver, and ACC levy, which in turn leads to a reduced Kiwisaver and ACC levy bill for you, the employer.

Here are a few examples of payroll blogs/info on Workride. - Smartly Payroll Link - Crystal Payroll Link - iPayroll Link - PayHero Link

Workride is dedicated to reshaping New Zealand's transportation landscape by promoting cycling. In collaboration with government bodies, local councils, and the riding industry, we offer a comprehensive scheme that benefits both employers and employees. By making cycling accessible and cost-effective, we aim to reduce traffic congestion, promote healthier lifestyles, and foster a more motivated workforce. With our robust partnerships and commitment to excellence, Workride is a movement for a healthier New Zealand.

A salary sacrifice is not a deduction but rather a repackaging of an employee’s salary, which involves a mutual agreement to amend the employee’s terms of employment. Here’s how it works and why this distinction is important:

Key Points:

1. Amendment to Employment Agreement

   • A salary sacrifice is a formal adjustment to the employee’s gross salary or wages before tax.

   • It is done through an agreement between the employer and employee and typically documented as a variation to the employee's Individual Employment Agreement (IEA).

   • This means the employee agrees to receive less gross salary in exchange for a benefit, such as Workride, which is provided effectively through a pre-tax sacrifice.

Register online and we'll send you our onboarding pack with legal documents and guidelines. Once registered, we create an account for you on our web app where you can review and approve employee requests. We handle the paperwork and compliance checks.

Any employer based in New Zealand can register with Workride to offer this benefit to their employees. Simply register online, and we'll send through all the necessary documentation to get you started.

The employee gets the commuting equipment through a lease with WorkRide, either for 12 months or until they leave their job, whichever is sooner. Even though they use it, WorkRide owns the equipment during this lease period. The employee is responsible for its care. So, if it's lost, damaged, or stolen, they'll need to fix or replace it. They must also use it correctly, according to its maker's guidelines, follow certain WorkRide rules, and mainly use it for getting to and from work.

During the 12-month lease with WorkRide, the employee holds legal possession of the ride, but Workride retains ownership .At the conclusion of the 12-month lease of the ride equipment, the participating individual will receive an email directly from Workride outlining their ‘Next steps’ options regarding ownership of the ride equipment.

At the end of the access period, there's no extra hassle for you. Our employer agreement ensures that Workride takes ownership of all the ride equipment processed through the scheme, leaving us responsible for its future. Once the lease agreement ends, whether due to the 12-month expiry or an employee's departure of employment, WorkRide directly contacts the participating individual to discuss the Next steps in regards to ride equipment ownership options.

Once you're onboarded with Workride, maximize employee engagement with the scheme by creating a dedicated section under staff benefits on platforms like Teams or Slack, giving an overview of Workride. Additionally, display visual posters in communal office areas and weave information about Workride into welcome materials for new employees. This approach ensures the scheme's visibility and accessibility, during the onboarding process we can supply all the collateral you require.

Many employers choose to fund the Workride scheme directly from their own cashflow, recognizing the significant benefits it brings to staff in terms of health and wellbeing.

If direct funding isn’t an option for you, stay tuned!

We are in collaboration with trusted capital partners who are developing a financing mechanism to enable any employer to offer Workride to their employees

When your employee chooses a ride through Workride, we invoice you for a 12-month lease equivalent to the ride's cost. Your employee then salary sacrifices this total amount. As an employer you are able to claim GST on this expense, however you are also required to pay GST on the supply, these net out to zero on day one. The employee's salary sacrifice is the GST inclusive ride cost, ultimately enabling you to recover the total cost of operating the scheme.

Under the Health & Safety at Work Act, your organisation is only liable for employees when they are performing official tasks, like biking to a work-related meeting. Commuting is not covered by this Act. However, when offering the Workride scheme, it's recommended to promote cycle skills training, especially for e-bike users. There are numerous certified trainers across New Zealand who offer specialized training. Even though daily commuting isn't included in the Act, providing safe cycling guidelines is a responsible step. For more insights on cycling safety, visit www.bikeready.govt.nz.

The salary sacrifice and the lease are distinct from each other. While the salary sacrifice helps the employer recoup the costs of the ride, any mishaps with the leased equipment, like damage or theft, won't stop the salary sacrifice. So, an employee might finish their equipment lease but still have to continue with their salary reductions. For instance, if an employee takes a break and the salary sacrifice pauses, they might still be making salary sacrifices after the lease ends.

Employees typically enter the Workride arrangement once over the estimated useful life of the equipment, starting from the day the lease agreement begins. However, there are exceptions that may warrant an early replacement. These can include situations like theft or destruction of the equipment, excessive wear and tear, a change in the employee's commuting needs, accidental damage that renders the equipment impractical to use, changes in an employee's physical health that necessitate different equipment, or changes in local regulations that require compliance with new safety or legal standards.

The salary sacrifice period cannot be shortened from 12-months due to tax compliance. GAAR considerations would apply.