Fringe Benefit Tax (FBT)
Definition
A tax paid by employers on non-cash perks and benefits provided to employees (e.g. company cars).
Key Takeaways
- FBT is paid by NZ employers on non-cash benefits like company cars, low-interest loans, and subsidized perks.
- FBT rate for 2025-26 is 63.93% of the taxable value of the fringe benefit.
- Employers are responsible for paying FBT; employees don't pay it directly.
- Can be filed quarterly or annually with IRD; some benefits have exemptions or alternative valuations.
Detailed Explanation
Fringe Benefit Tax (FBT) is a tax paid by employers in New Zealand on non-cash benefits provided to employees as part of their employment package. FBT applies to perks like company vehicles for private use, low-interest loans, subsidized accommodation, employer-provided health insurance, and gym memberships. The employer (not the employee) is responsible for paying FBT to Inland Revenue.
For the 2025-26 tax year, the FBT rate is 63.93% of the taxable value of the fringe benefit. For example, if the taxable value of a company car's private use is $10,000, the employer pays $6,393 in FBT. Employers can choose to file FBT quarterly or annually. Some benefits have exemptions or alternative valuation methods (e.g., motor vehicle mileage rates).