FBT Calculator

Fringe Benefit Tax (FBT) is a tax paid by New Zealand employers on non-cash benefits they provide to employees as part of their remuneration. FBT is designed to ensure that benefits provided instead of (or in addition to) salary are taxed equivalently to cash wages. Common benefits that trigger FBT include: motor vehicles available for private use; low-interest or interest-free loans to employees; employer-subsidised goods or services provided at below-market prices; employer contributions to life, health, or income protection insurance; and certain leisure or entertainment benefits. The critical point is that FBT is paid by the employer — not the employee. The employee receives the benefit without paying tax on it directly, because the employer has already paid the FBT. FBT returns must be filed quarterly (or annually for small employers) with Inland Revenue. Source: IRD — Fringe Benefit Tax (ird.govt.nz/employing-staff/fringe-benefit-tax).

New Zealand employers can choose from three methods to calculate and pay FBT. The single rate method applies a flat FBT rate of 49.25% to the taxable value of all fringe benefits, regardless of the individual employee's income. This is the simplest method and is often used by employers with predominantly higher-income employees. The alternate rate method calculates FBT based on each employee's marginal income tax rate, applying the appropriate FBT rate for their income band. This can result in lower FBT for employees on lower incomes. The short-form alternate rate method is a simplified version of the alternate rate available to smaller employers. For the first three quarters of the year, employers pay at the 49.25% single rate, then calculate the actual amount owed at year-end using the alternate rate, making an adjustment payment or receiving a credit. Employers should model both methods to determine which results in lower FBT liability. Source: IRD — FBT Rates (ird.govt.nz/employing-staff/fringe-benefit-tax).

FBT applies to any motor vehicle that an employer makes available for an employee's private use, even if the employee does not actually use it privately. The taxable value of a motor vehicle benefit is calculated quarterly as 5% of the vehicle's cost price (including GST), regardless of how much the employee actually uses it. On an annual basis this equates to 20% of the vehicle's cost. For a $50,000 vehicle, the FBT taxable value would be $2,500 per quarter. If the vehicle is available for only part of a quarter, the amount is pro-rated by the number of days. Electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) receive concessional FBT treatment: from 1 April 2021 until 31 March 2026, EVs and PHEVs costing under $80,000 are exempt from FBT when first provided to an employee. This exemption was introduced to encourage EV uptake in New Zealand's business fleet. Source: IRD — FBT on Motor Vehicles (ird.govt.nz/employing-staff/fringe-benefit-tax).

Yes, there are several categories of benefits that are exempt from FBT in New Zealand. Work-related vehicles that are not available for private use are exempt — this requires genuine restrictions on private use and proper record-keeping. Employer contributions to portable superannuation schemes (other than KiwiSaver) may be exempt in certain circumstances. Employer-subsidised car parking more than 1 kilometre from the Auckland or Wellington CBD is exempt; car parking within that boundary that costs more than $5.00 per day (or is in a "fringe benefit" area) may attract FBT. Small, infrequent benefits that are impractical to value — sometimes called "de minimis" benefits — may be exempt if they are genuinely minor and irregular. Work-related health and safety equipment provided for use at work is generally exempt. Free or subsidised meals provided on the employer's premises during work hours may also qualify for an exemption. Employers should carefully document exempt benefits to avoid liability on review. Source: IRD — FBT Exemptions (ird.govt.nz/employing-staff/fringe-benefit-tax).