At the forefront of transforming New Zealand’s daily commute into a more environmentally friendly journey is Workride. Workride has introduced a new scheme, the Ride-to-Work benefit scheme, designed to benefit both employers and employees. This initiative is not just about providing eco-friendly commute options; it’s a commitment to accessible and cost-effective cycling, aiming to alleviate traffic congestion, encourage healthier living, and inspire a more energized workforce. Workride is changing the way employees travel to work, making the daily trip not just more eco-conscious but also tax-efficient.
Receiving the Inland Revenue Department’s (IRD) stamp of approval in the form of a binding ruling, this green transportation initiative stands out for allowing employees the opportunity to acquire a bike, e-bike, or scooter through an effective sacrifice. When an employee chooses to sacrifice a portion of their salary for a Workride benefit, the amount is deducted from their pre-tax income. This leads to savings on PAYE, KiwiSaver, and ACC levies for both the employee and employer. So instead of paying tax, and then buying a ride with your after-tax income, Workride enables employees to sacrifice a portion of their pre-tax pay for a chosen ride benefit, ultimately meaning employees get the ride at a lower cost! Upon completing the initial leasing term, employees are given the option to take ownership of their new ride, enabling them to permanently shift to more sustainable commuting methods.
WorkRide, freshly launched, is rapidly gaining momentum, collaborating with hundreds of employers across councils, businesses, and government agencies to roll out their free benefit scheme for their teams. Excitingly, this initiative is available throughout New Zealand, boasting a network of over 70 approved partner stores where you can select your ideal bike, e-bike, or scooter.
What’s more is that with Workride’s new approved scheme, the benefits of acquiring a bike, e-bike or scooter to employees under a salary sacrifice fall under the recent FBT exemption for employer-provided low-power vehicles for commuting to and from work. This means that under the Workride scheme, neither the employer nor the employee will incur FBT on the ride benefit, making the program more financially attractive for both parties. Workride’s new scheme encourages alternative, greener transport options in the workplace with a cost-effective strategy.
Workride’s Ride-to-Work program is completely free for employers to use and its dedicated software platform expertly manages all administrative tasks, from handling tax issues to maintaining regulatory compliance. Employers simply need to enroll, review, approve, and pay for the benefits, with Workride taking care of the rest, allowing them to offer significant employee benefits with ease.
If you’re an employer whose passionate about providing your employees with a cost-efficient and sustainable way to travel to work, Workride is looking for employers to join the Ride-to-Work scheme. If this sounds like an initiative that could benefit your workplace or know someone who might be interested, you can start registering on their website here.
Or, you can learn more about how the scheme works here.
Let’s illustrate this with an example:
Say Katie wants to join the Workride scheme and chooses a $5200 e-bike ride benefit.
Katie earns an annual salary of $80,000, earning $1,538 weekly gross. She usually pays $356 in PAYE and ACC Levy and $193 towards her Student loan and KiwiSaver (Assuming 4% KiwiSaver and Student loan).
In exchange for getting her ride benefit, she agrees to a pre-tax salary sacrifice of $5200 total which works out to be $100 weekly towards her WorkRide e-bike. This means her weekly taxable income now drops from $1,538 to $1,438.
With a drop in taxable income, her PAYE and ACC Levy also drops. Her PAYE and ACC Levy drop to $322 and her Student loans and KiwiSaver drops to $177.
Overall, her net pay has reduced from $988 to $939.
So Katie’s salary sacrifices $5200 total, which is $100/week equivalent to taking up a ride benefit, but it only reduces her net pay by $49!
In the end, even though Katie has sacrificed $5200 pre-tax for the e-bike over the year, through Workride it has effectively only had a net cost of $2,572 considering the tax savings & cost offset! How epic!
Workride also has a video to demonstrate the savings and their offsets.
So how exactly does the Ride-to-Work scheme save employees money when they acquire their new ride? Through Workride’s salary sacrifice scheme, employees can save money by temporarily reducing their total taxable income, which in turn lowers the amount of tax paid. When employees earn less on