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Fringe benefit tax - calculating the real cost of employee perks

Fringe benefit tax is one of the trickier areas of day-to-day taxes for Kiwi businesses.

What is fringe benefit tax aka FBT?

It's a way of taxing employee benefits, and is designed to make sure people are paying tax on all types of income, including perks.

Does your business need to pay FBT?

Fringe Benefit Tax may apply if you provide perks for any of your employees. These can include a car they might drive with personal use included, personal travel, or a gym membership. Deductible entertainment expenses are also subject to FBT – vouchers for hitting sales targets, for instance. Low-interest loans and some types of contributions to funds or insurance policies may also be liable for FBT.

Paying tax on these fringe benefits can change the overall cost to your business significantly so you should always take the FBT into account when you calculate the true cost of provide a perk. We're here to help with any questions or working it all out! .

Public Transport Passes

It'll be handy for some businesses to note that a tax bill introduced in August 2022 removed FBT from public transport costs - this means your business can provide public transport passes for employees and not have to pay FBT on these costs.

Think you might have some questions?

If your business provides any perks to team members, give us a call or send us an email. We can help you understand the complete costs of those perks in the upcoming tax year and explain how different options might work for your company.

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