About Fringe Benefits

What is a Fringe Benefit?
Fringe benefits (perks) include most benefits given to employees in addition to their salary or wages. This section gives an overview of the categories of benefits that are liable for fringe benefit tax, and those that are not.

For the purposes of record keeping and FBT returns, you should also be aware of attributed and non-attributed benefits.

  • Attributed benefits are attributable to one specific employee
  • Non-attributed benefits are pooled or shared fringe benefits that are not attributed to an individual employee

When you register as an employer, you indicate whether you will provide fringe benefits to your employees. In some cases you may not initially provide fringe benefits but at a later stage you begin to provide them.

If so, contact Inland Revenue to let them know about the change.

What are the Categories of Fringe Benefits?
Fringe benefits cover most of the benefits you give to employees in addition to their salary or wages.

Examples are motor vehicles, low-interest loans, free or discounted goods and services, and employer contributions to sickness or death benefit funds.

The 4 main groups of fringe benefits are:

  1. Motor vehicles

  2. Low-interest loans other than low-interest loans provided by life insurance companies

  3. Free, subsidised or discounted goods and services, including subsidised transport for employers in the public transport business

  4. Employer contributions to sick, accident or death benefit funds, superannuation schemes and specified insurance policies.

Gifts, prizes and other goods are fringe benefits. If you pay for your employees' entertainment or private telecommunications use, these benefits may also be liable for fringe benefit tax.
Benefits in all these categories are liable for fringe benefit tax (although see each individual category for exceptions). They may be attributed or non-attributed benefits.

What is Fringe Benefit Tax?
As an employer, you are liable to pay fringe benefit tax on the fringe benefits that you give to your employees or shareholder-employees.

Fringe benefit tax (FBT) is a tax on benefits that employees receive and enjoy as a result of their employment.

  • Employees may be past employees, as well as present or future employees. For example, your liability continues if your employer status changes, but you continue providing a fringe benefit (for example, a low-interest loan) to a former employee.

  • Liable benefits include benefits that someone gives to employees or shareholder-employees on behalf of the employer.