{"id":1790,"date":"2023-04-17T10:19:37","date_gmt":"2023-04-16T22:19:37","guid":{"rendered":"https:\/\/marketingwebsite.afirmo.com\/nz\/?p=1790"},"modified":"2023-05-23T07:06:58","modified_gmt":"2023-05-22T19:06:58","slug":"what-is-fringe-benefit-tax-fbt-and-how-does-it-work-in-nz","status":"publish","type":"post","link":"https:\/\/www.afirmo.com\/nz\/resources\/what-is-fringe-benefit-tax-fbt-and-how-does-it-work-in-nz\/","title":{"rendered":"What is fringe benefit tax (FBT) and how does it work in NZ?"},"content":{"rendered":"

When you provide employment benefits like these, it\u2019s likely you\u2019ll need to pay fringe benefit tax (FBT) to Inland Revenue. Forgetting or not realising you need to pay FBT can be an expensive exercise, because you can be charged for the tax you\u2019ve missed plus penalties.\u00a0<\/span><\/p>\n

The best approach to FBT is to have a clear picture of what it is, what it applies to, how it\u2019s calculated and when it needs to be paid.\u00a0<\/span><\/p>\n

What is Fringe Benefit Tax (FBT) in NZ?<\/h3>\n

Fringe benefits are additions to employee compensation. \u2018Perks\u2019 is another word for fringe benefits. In New Zealand, these nice-to-have-extras require the payment of FBT. Here are the five categories of taxable perks:<\/span><\/p>\n

1 – A vehicle provided by your business for an employee\u2019s private use. To quote Inland Revenue: \u201c<\/span>A motor vehicle fringe benefit arises when an employer makes a motor vehicle available to an employee for their private use, in connection with the employment relationship.\u201d <\/span><\/i>You are liable to pay FBT even if the employee doesn\u2019t actually use the vehicle.\u00a0<\/span><\/p>\n

2 – Goods or services provided to an employee as part of their remuneration package. These could be fully-subsidised or discounted. Examples include a mobile phone and public transport passes. FBT also applies if you provide employees with goods or services your company makes or provides for less than the usual retail price.<\/span><\/p>\n

3 – Low interest loans. If you give an employee a loan at less than the prescribed or market rate of interest, and this loan is not available to the public, you\u2019ll need to pay FBT.\u00a0<\/span><\/p>\n

4 – Financial products like superannuation schemes and life insurance policies. The full list from Inland Revenue includes:<\/span><\/p>\n