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Fringe benefit tax: inclusions and exemptions

FBT is a tax payable by employers on certain benefits provided to employees. Should your business be paying FBT?

Fringe Benefit tax (FBT) is payable when the following benefits are supplied to employees:

  • Private use of a motor vehicle
  • Low or interest-free loans
  • Free, subsidised or discounted goods or services
  • Employer contributions to sick, accident, insurance schemes

Once you start providing fringe benefits to your employees, you will need to register for FBT via My IR and file quarterly returns.

The most common type of FBT is for private use of a motor vehicle, but there are some exceptions.

  • It’s a work-related vehicle, defined as a vehicle weighing less than 3,500 kgs, is sign written, designed to carry goods or goods and passengers equally and your employee is advised in writing that it’s not available for private use.
  • Emergency calls
  • Business travel

To calculate the fringe benefit tax payable on a motor vehicle you will need the vehicle’s cost or book value, the number of private use days in the quarter and any employee contributions towards the vehicle’s use.

This is the IRD FBT Calculator link.

The detailed rules can be complex, so for specific advice relating to your circumstances, please do not hesitate to get in touch.

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