Re-cycle your salary on a cheap commuter e-bike 

Smith is the co-founder of Workride, a ride-to-work benefit programme based out of Christchurch. For the past two years, Workride has been helping employees around the country get their hands on cheaper standard bikes and e-bikes. The scheme allows them to direct a portion of their salary to the purchase.

This is done using a system called a ‘salary sacrifice’ in which tax rebates – of between 32-63% – are offered off the quoted price of the bike. Paid in instalments from wages across a year, it allows consumers to pay far less than the normal retail cost.

Smith admits it's a complicated system that works with the fringe benefit tax (FBT) change he campaigned for in 2023.

Since then, Smith, co-founder Connor Read and the Workride team have helped more than 3,000 people begin their journey towards getting a new bike through the Workride scheme.

They have plans to grow that number much higher.

What is fringe benefit tax?

FBT is a tax paid by an employer if they provide benefits to their employees beyond a salary, that is, they provide ‘fringe’ benefits. FBT is separate from income tax and is worked out from the taxable value of the fringe benefits.

How Workride started

Before Workride, Smith and Read were running an e-bike subscription service in Christchurch called Shutl.

A subscription service is like leasing a bike for a set time. It gives riders the ability to try out a bike before committing to buying one. Smith and Read’s service aimed to remove the cost barriers for those who wanted to take advantage of the benefits of an e-bike.

They found some companies wanted to supply staff with this service but were forced to pay FBT.

Smith says FBT can be a prohibitive cost for many businesses, but exemptions can “incentivise good habits”, like biking to work instead of using a car.

Smith and Read campaigned, presenting the government with 500 letters of support from businesses who said they'd like to use the Workride e-bike subscription service . In 2023, FBT was removed for companies providing bike, e-bike, scooter or e-scooter services.

Soon, Smith and Read had abandoned their subscription service and pivoted to offering support to businesses who wanted to take advantage of this FBT change.

That’s when Workride was born.

How does a salary sacrifice work?

A salary sacrifice is a well-known term in many countries. Employees can choose to use a portion of their salary each year to buy clothes or a car or even pay off a portion of their mortgage while taking advantage of tax offsets. "It's very common over in Australia and in the UK and Europe," says Smith. "You get a book, and it says, 'This is your income for the year – what do you want in terms of benefits?'"

Salary sacrifices aren’t widely used in New Zealand, but Workride is trying to change that.

There are two steps to the Workride scheme.

• Your employer needs to sign up to the scheme.

• You need to choose a bike or e-bike that will suit your needs from an affiliated store.

Smith says 97% of Aotearoa bike shops are signed up to the scheme.

For someone about to purchase a new bike, the benefits can be huge. Smith says typically a $5,000 e-bike will end up costing about $3,200 under Workride, a saving of around 36%. The cost of the bike would be taken out of the employee’s salary over a year – around $60 a week.

“Instead of that $5,000 going through to their wages, which would have tax, ACC levies, KiwiSaver and student loan removed, it goes directly to a bike benefit that they then get to use,” he says.

The electrifying interest in e-bikes

Few statistics are available about how popular e-bikes are in Aotearoa, but we know demand surged during the pandemic. There were 15,000 imported in 2017, with that number rising to 78,000 in 2022.

Smith says more than 1,000 companies are signed up to Workride, and around 3,000 bike benefits have begun their process or are out there being used as part of the scheme.

He’s effusive about the benefits of commuting on an e-bike. “It’s just as easy as driving a car,” he says. “There’s little effort required. You don’t have to shower when you get to work. You don’t have to sit in traffic.”

That, on its own, is the best sales tactic. “If someone’s having an awesome experience, they're going to go tell their mates about it,” he says. “If we create thousands of awesome experiences, that's so much more powerful than a handful of us going and talking to businesses one by one.”

Choosing the right e-bike

• E-bikes often cost a lot more than their manual equivalents, so make sure you test ride a few before deciding on the one for you.

• Consumer NZ has tested 30 different e-bike makes and models, for commuting or recreation.

• Research tips on commuting to work on your new e-bike.

• Workride has a list of affiliated bike stores to help you find an e-bike.

• More information can be found on Workride's website.