FBT Calculation



Calculating Fringe Benefit Tax
You have choices regarding the rate of fringe benefit tax you use, depending on which type of return you file. There are also rates required for major shareholder-employees as well as the different options for FBT rates (full multi-rate, short form multi-rate) for employers.

You can calculate FBT payable for shareholder-employees and employees receiving attributed income using the flat rate or the multi-rate also if it applies to you as an employer.

You can choose to pay fringe benefit tax at a flat rate of 64% on all benefits you provide to employees, including shareholder-employees.

However, if an employee who receives a fringe benefit earns under $60,000, the 64% FBT rate effectively over-taxes their fringe benefits. To deal with this situation, IRD also have a multi-rate calculation process for fringe benefit tax.

The multi-rate calculation process allows an employee's fringe benefits to be taxed at their marginal tax rate. It ensures that fringe benefits of employees earning less than $60,000 are not over-taxed (as they may be under the flat rate option).


FBT Rates

a) Rates when filing quarterly FBT returns

  • In each of quarters 1 to 3 you must choose whether to pay fringe benefit tax at the rate of 49% or 64%.

  • If you choose 49% in any one of quarters 1 to 3, you must complete either the full multi-rate calculation process or the short form multi-rate calculation option in the final quarter.

  • If you choose to pay fringe benefit tax at the rate of 64% in the first three quarters, you can either complete the multi-rate calculation in the final quarter or pay fringe benefit tax at 64%.

Decide which rate to choose based on your own situation.

b) Rates when filing yearly FBT returns

If you complete an annual or income year return, you can choose to either:

  • pay fringe benefit tax at 64% of the taxable value of the benefits provided, or
  • complete the full multi-rate calculation process or the short form multi-rate calculation option.

c) Rates for major shareholder-employees

For a major shareholder-employee, or an associated person of the major shareholder-employer (where the fringe benefit is not received as an employee), the flat rate of 64% applies to non-attributed fringe benefits that they receive. If a major shareholder-employee or an associate is one of the recipients of non-attributed benefits, then the FBT rate is 64% on all non-attributed benefits.

However, where it is possible to individually assign non-attributed benefits to individuals you can create 2 categories:

  • one category for benefits for which a major shareholder-employee or an associate is not one of the recipients. Here the flat rate of 49% applies

  • another category for benefits for which a major shareholder-employee or an associate is one of the recipients. Here the flat rate is 64% applies.