Fringe Benefits Tax (New Zealand)
Encyclopedia
Fringe Benefits Tax within the system of taxation in New Zealand
is the tax applied to most, although not all, fringe benefits ("perk
s"), including the ones provided through someone other than an employer. FBT is paid to Inland Revenue
by the employer and is calculated with reference to the taxable value of the benefit provided to the employee or associate
.
The categories of benefits include motor vehicles, low-interest loans, free, subsidised or discounted goods and services, employer contributions to funds, insurance
and superannuation schemes and other benefits.
s. Taxpayers must pay quarterly unless they qualify for, and have elected to, use another period for filing.
Since 1 April 2001, FBT has been payable using one of two options. The Single Rate Option (whereby FBT is paid at the highest FBT rate on all employees), or the Alternate Rate Option (formerly called the Multi Rate Option, which involves attribution of benefits to individual employees and pooling of non-attributable benefits and certain de minimis benefits). There is a 'short form' way of calculating under the alternate rate option, which is simply to pool non-attributable and de minimis benefits but pay the highest rate of FBT on remaining benefits rather than attribute to employees.
New Zealand FBT rates are determined by grossing up personal income tax rates. As such, FBT rates are updated when personal income tax rates are changed.
Taxation in New Zealand
Taxation in New Zealand is collected at a national level by the Inland Revenue Department on behalf of the Government of New Zealand. National taxes are levied on personal and business income, as well as on the supply of goods and services. There is no capital gains tax although certain "gains"...
is the tax applied to most, although not all, fringe benefits ("perk
Employee benefit
Employee benefits and benefits in kind are various non-wage compensations provided to employees in addition to their normal wages or salaries...
s"), including the ones provided through someone other than an employer. FBT is paid to Inland Revenue
Inland Revenue Department (New Zealand)
Inland Revenue , previously known as the Inland Revenue Department, is the New Zealand government department responsible for the collection of over 80% of the Crown's revenue in New Zealand. It also collects and disburses social support programme payments and provides the government with policy...
by the employer and is calculated with reference to the taxable value of the benefit provided to the employee or associate
Business partner
Business partner is a term used to denote a commercial entity with which another commercial entity has some form of alliance. This relationship may be a highly contractual, exclusive bond in which both entities commit not to ally with third parties...
.
Legislation
Legislation governing what a fringe benefit is, and is not, is contained within part CX of the Income Tax Act 2007. The imposition of FBT is contained within part RD of the Income Tax Act 2007.The categories of benefits include motor vehicles, low-interest loans, free, subsidised or discounted goods and services, employer contributions to funds, insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
and superannuation schemes and other benefits.
Paying FBT
FBT filing may be quarterly, finance year, or annual tax returnTax form
A tax form is a blank document or template supplied by a government for use in the reporting of tax information to the government or to potential taxpayers...
s. Taxpayers must pay quarterly unless they qualify for, and have elected to, use another period for filing.
Since 1 April 2001, FBT has been payable using one of two options. The Single Rate Option (whereby FBT is paid at the highest FBT rate on all employees), or the Alternate Rate Option (formerly called the Multi Rate Option, which involves attribution of benefits to individual employees and pooling of non-attributable benefits and certain de minimis benefits). There is a 'short form' way of calculating under the alternate rate option, which is simply to pool non-attributable and de minimis benefits but pay the highest rate of FBT on remaining benefits rather than attribute to employees.
New Zealand FBT rates are determined by grossing up personal income tax rates. As such, FBT rates are updated when personal income tax rates are changed.
2011 FBT (1 April 2010 - 31 March 2011)
Due to a change in income tax rates from 1 October 2010 (mid tax year), the FBT rates for 2011 are blended for the year.- Single rate option - 61% for Q1-Q2, 49.25% for Q3-Q4
- Alternate rate option - 49% or 61% for Q1-Q2, 43% or 49% for Q3, Alternate rate calculation in Q4
- Alternate rate option pooling - 45.99% for employee pool and 55.04% for shareholder pool
2010 FBT (1 April 2009 - 31 March 2010)
- Single rate option - 61% for all quarters
- Alternate rate option - 49% or 61% for Q1-Q3, Alternate rate calculation in Q4
- Alternate rate option pooling - 49% for employee pool and 61% for shareholder pool