New FBT Rate

Written by
MBS Advisors
Published on
April 14, 2021

Time to review employee perks

Along with a new top tax rate introduced on April 1st, we also had a new top fringe benefit tax rate come into effect.

What is fringe benefit tax?

Fringe benefit tax, or FBT, is a way of taxing employee benefits. It’s designed to ensure people are paying tax on all types of income, including perks. As the top tax rate has increased to 39%, the FBT has also risen, to keep both rates in line.

What’s the new rate?

Beginning in the 2021/2022 financial year, the single-rate FBT is now 63.93%. The short form alternate rate has also increased, to 49.25%. You can read about FBT rates in more detail here on the Inland Revenue website.

What will this mean for your business?

The new FBT rate will have an impact if you provide perks for any of your employees (including shareholder employees).

This may include a car that can be driven for personal use, personal travel, or a gym membership, for instance. Deductible entertainment expenses are also subject to FBT – vouchers for hitting sales targets, for example. 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 may now come with a higher tax cost for your business, so this is. the time to review your employee perks.

What should you do?

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

Share this post
Blog

Explore our latest articles

Enjoy our latest news and blog posts

5 min read

Which business expenses can you claim against tax?

Incurring expenses is an unavoidable fact of running a business. But which expenses can you claim tax deductions against and which don’t meet the tax-free criteria? Here’s our lowdown on which expenses you can claim against tax. Which business expenses can you claim deductions against? If your business expense is...
5 min read

Government COVID-19 Wage & Leave Subsidies

We understand that there is a lot of ambiguity when it comes to the Government providing significant COVID-19 wage and leave subsidies to employers and self-employed persons. Many of you will have questions about how we treat these for Income Tax, GST, and Payroll purposes. Below is a brief...
5 min read

What is ACC CoverPlus Extra?

If you are self-employed or a contractor you have two options for your Accident Compensation Cover - Standard CoverPlus (CP) CoverPlus Extra (CPX) You’ll automatically be placed on CoverPlus (CP) and Inland Revenue provides ACC with a summary of your earnings from your income tax return (IR3). This information, combined...

Stay updated and sign up to our newsletter

By clicking Sign Up you're confirming that you agree with our Terms and Conditions.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.