Fringe Benefits & Business

Filing an FBT return
You will file one of the following kinds of FBT returns:

  • Fringe benefit tax annual return (IR422), which covers the year ended 31 March and is due on 31 May

  • Fringe benefit tax income year return (IR421), for a company with shareholder-employees, which covers the company's accounting year and is due at the same time as the company's due date for paying its end-of-year income tax

  • Fringe benefit tax quarterly return (IR420), for employers who must file an FBT return each quarter. 

Employer Obligations for FBT

As an employer, if you provide fringe benefits (perks) to your employees, or other people associated with your business, you must generally pay fringe benefit tax on the value of these benefits.

If you are liable for fringe benefit tax, you must file regular FBT returns. These returns may be for each quarter, the income year or annual. For any type of FBT return, where fringe benefit tax is not paid by the due date, use-of-money interest is charged.

What are Your Obligations When Status Changes?
In all cases when your employer status changes, you must file FBT returns until you stop providing fringe benefits.

  • If you stop employing and also stop providing fringe benefits, let IRD know. You must file a final return to cover the period up to the date you stopped employing.

  • If you stop employing or discontinue your business but still provide benefits to past employees or shareholder-employees, continue to file FBT returns. For low-interest loans, you must file returns until the total loan is repaid.

Rate of Fringe Benefit Tax

You have choices regarding the rate of fringe benefit tax you use, depending on which type of return you file. You should also be aware of the rates required for major shareholder-employees and the different options for FBT rates (full multi-rate, short form multi-rate) for employers.

  • 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.

  • Choose to pay fringe benefit tax at a flat rate of 64% on all benefits you provide to employees, including shareholder-employees. Know about the use of the flat rate option to calculate FBT.

  • 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). Know about the use of the multi-rate calculation process to calculate FBT as an employer.