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Fringe benefit tax guide - A guide to working with FBT
Page created by Bradley Potter
A guide to working with FBT
1                                                                   www.ird.govt.nz                                     FRINGE BENEFIT TAX GUIDE
We’ve written this guide to help employers with their fringe benefit tax
(FBT) requirements.
If, after reading this guide, you have any questions, or need help with
your FBT, call us on 0800 377 772.
Introducing "Audis on Anglesey"
Throughout this guide we’ll be following one company, giving examples
of options for working out FBT. We’ll also show a completed FBT return
and schedules for the quarter ending 31 March 2020.
Audis on Anglesey Ltd has been operating for 15 years and has two
shareholders, Allan and Karyn. The principal activity of the company is
selling and servicing new and used Audi cars.
There are 15 employees. Here’s a list of some of the employees’
•   Michael and Zac are the two new motor vehicle salespersons.
•   Bailey is the used motor vehicle salesperson at a subsidiary yard
•   Nicole is the administrative manager responsible for all tasks in the
•   George is the service manager and is responsible for Mark, James
and Flynn (mechanics), and Sarah (car groomer).
2                                                                 www.ird.govt.nz                                    FRINGE BENEFIT TAX GUIDE
www.ird.govt.nz                                                            myIR
Go to our website for information and to use our services and tools.       A myIR account lets you manage all your Inland Revenue matters
•   Log in or register for a myIR to manage your tax and entitlements      securely online. You can update your address, phone, email or bank
online.                                                                account details, check your eDocuments, work out your income tax
filing options and check your KiwiSaver account.
•   Demonstrations - learn about our services by watching short
videos.                                                                Register for a myIR account today to:
•   Get it done online - complete forms and returns, make payments,        •   check if you’re due a refund
give us feedback.                                                      •   file an Employment information (IR348), IR3 tax return or GST
•   Work it out - use our calculators, worksheets and tools, for               return
example, to check your tax code, find filing and payment dates,        •   see payments to or from Inland Revenue (including child support
calculate your student loan repayment.                                     and student loans)
•   Forms and guides - download our guides and forms.                      •   manage your alert email settings
•   apply for/manage your Working for Families Tax Credits.
How to get our forms and                                                   myIR is available 24 hours a day, seven days a week. Go to
www.ird.govt.nz/myIR to find out more.
Request these online and we’ll send them to the email address we hold
You can get copies of all our forms and guides by going to                 for you.
www.ird.govt.nz and selecting "All forms and guides" from the right-
hand menu, or by entering the shoulder number in the search box. You
can also order copies by calling 0800 257 773.
3                                                                 www.ird.govt.nz                                      FRINGE BENEFIT TAX GUIDE
Introduction                                                         1     Part 6 - Employer contributions to funds, insurance
www.ird.govt.nz                                                       2    and superannuation schemes                          27
How to get our forms and guides                                       2    Life insurance contributions                                          27
myIR                                                                  2    Discounted life insurance for agents                                  27
The taxable value of the fringe benefit                               27
How to use this guide                                                4
Attributed and non-attributed benefits                                27
Part 1 - Fringe benefits overview                                    5     FBT taxable value calculation sheet - quarterly (IR427)               28
Registering for FBT                                                   5    Record keeping                                                        28
Fringe benefits                                                       5
Cash benefits                                                         5
Part 7 - Completing FBT returns                                       29
Annual and income year returns                                        29
Benefits provided instead of a cash allowance                         5
Completing FBT quarterly return (IR420) for quarters 1 to 3           29
FBT terms you’ll need to know                                         5
Completing FBT returns for quarter 4                                  32
Part 2 - Returning FBT                                               8     Shareholder-employees’ remuneration or attributed income
FBT return forms                                                      8    unknown                                                               32
Due dates for elections                                               8    Attributed and non-attributed benefits                                33
Change in status                                                      9    Completing a fourth quarter "full" alternate rate calculation sheet   37
Part 3 - Motor vehicles                                             10     Completing your calculations for shareholder-employees
or persons receiving attributed income                                39
Exemptions from FBT on work-related vehicles                         10
Remuneration adjustment worksheet for XYZ Ltd                         40
Emergency calls                                                      11
Completing a fourth quarter "short form" alternate rate calculation   41
Business travel                                                      11
FBT to pay                                                            41
Other days not liable                                                12
How to make payments                                                  41
Election of the commencement of a 24-hour period                     12
Late payment                                                          41
Three-month test period                                              12
Nil return                                                            41
Motor vehicle valuation methods                                      13
Motor vehicle cost price or tax value?                               13    Part 8 - GST and income tax                                           42
Determining the value of pooled motor vehicles                       14    GST                                                                   42
Calculating the taxable value of private use of a motor vehicle      14    Income tax                                                            42
Employee contributions                                               15
Part 9 - Services you may need                                        43
FBT taxable value calculation sheet - quarterly (IR427)              16
Need to speak with us?                                                43
Record keeping                                                       17
0800 self-service numbers                                             43
Part 4 - Free, subsidised or discounted                                    Supporting businesses in our community                                43
goods and services                                                  18     Tax Information Bulletin (TIB)                                        43
Goods                                                                18    Privacy                                                               43
Services                                                             18    If you have a complaint about our service                             43
Exemptions for goods and services                                    19
Goods and services - attributed and non-attributed benefits          19
Subsidised transport                                                 20
Specific common issues                                               20
FBT taxable value calculation sheet - quarterly (IR427)              21
Record keeping                                                       22
Part 5 - Low-interest loans                                         23
Prescribed rate of interest                                          23
Market rate                                                          23
Interest subject to FBT                                              23
Loans not subject to FBT                                             23
Company provides low-interest loans                                  24
Taxable value of the fringe benefit                                  25
Annual and income year returns                                       25
FBT taxable value calculation sheet - quarterly (IR427)              26
Record keeping                                                       26
4                                                                  www.ird.govt.nz   FRINGE BENEFIT TAX GUIDE
Part 1 - Fringe benefits overview
Explains what fringe benefits are and who is liable to pay FBT.
Part 2 - Returning FBT
Explains when and how to return FBT and tells you what to do when
you stop employing.
Part 3 - Motor vehicles
Deals with FBT and motor vehicles. It explains when vehicles are liable
for FBT and the exemptions.
Part 4 - Free, subsidised or discounted
Shows you how to deal with these fringe benefits. It also explains how
entertainment expenses fit in with the FBT rules.
Part 5 - Low-interest loans
FBT is charged on low-interest loans made to employees. We show you
how to complete the return for these loans.
Part 6 - Employer contributions to funds,
insurance and superannuation schemes
If you make contributions to your employees' funds, such as
superannuation schemes and specified insurance policies, this part
shows you how to complete the return for these fringe benefits.
Part 7 - Completing FBT returns
Gives a step-by-step guide to completing FBT returns. It also explains
your filing requirements.
Part 8 - GST and income tax
Explains how fringe benefits affect other taxes.
Part 9 - Services you may need
Lists Inland Revenue services, contacts and useful publications.
5                                                                    www.ird.govt.nz                                      FRINGE BENEFIT TAX GUIDE
Registering for FBT                                                           Benefits provided instead of a cash
You need to register for FBT when you first start giving your employees       allowance
a fringe benefit. You can choose to register for FBT when you register as
an employer using our online service or when completing the Employer          Employers can pay cash allowances to employees for work-related
registration form (IR334).                                                    costs. FBT isn't payable on any non-cash benefits provided by an
employer in place of that allowance.
You can file your FBT return online in myIR or send us a paper return.
If you file online:                                                               Example
•   your personal details are already complete and other information is           Audis on Anglesey Ltd provides James and Flynn with tools for use
tailored to your situation so you only complete sections relevant to          at work rather than an equivalent cash allowance for the tools. If
you                                                                           James and Flynn had purchased the tools, any cash reimbursement
•   the system will do most of the calculations for you, making it easier         from Audis on Anglesey Ltd would not be taxable. So, the value of
and more accurate                                                             the tools isn’t subject to income tax or FBT.
•   you get a confirmation receipt as soon as we receive your return
•   you can amend the return after you've sent to us.                         If you're unsure whether an equivalent cash allowance is tax free, call us
on 0800 377 772.
If you use paper, we'll send you returns regularly. These returns will be
•   your name, address and IRD number                                         FBT terms you'll need to know
•   the period the return covers                                              A fringe benefit is a non-cash benefit provided to an employee or an
•   the date the return and any payment are due.                              associate of an employee. Most benefits given to employees other than
their salary or wages are fringe benefits.
Fringe benefits                                                               Associated person
Most benefits given to employees other than their salary or wages are
For FBT purposes an associated person is someone associated with the
employer or the employee by:
There are four main groups of taxable fringe benefits:                        •     within two degrees of blood relationship or one person is within
•   motor vehicles available for private use                                        two degrees of blood relationship to the other person's spouse,
•   free, subsidised or discounted goods and services                               civil union partner, or de facto partner*
•   low-interest loans                                                        •     marriage, civil union or de facto relationship
•   employer contributions to sickness, accident or death benefit             •     business partnership, or
funds, superannuation schemes and specified insurance policies.           •     shareholding interest.
If these benefits are enjoyed or received by employees as a result of         The association rules are complex, therefore it's important you seek
their employment, the benefits are liable for FBT. Employers pay tax on       professional advice if you think there's any possibility of an association
benefits provided to employees or shareholder-employees. You'll have          applying to you.
to file an FBT return either quarterly or annually, depending on the
* For example, one degree is your parent or child, and two degrees is your
election made, and make any payments due.                                       grandparent, grandchild or sibling.
Cash benefits                                                                     Note
Cash benefits are treated as normal salary and wages, taxable in the              Fringe benefits provided to an associate of an employee are to be
employee's hands, and aren't subject to FBT. Usually, you must deduct             taxed as though they were given to the employee, rather than the
some form of tax (eg, PAYE) from any cash benefits. Any personal                  associate.
expenditure incurred by an employee but paid for by the employer is
also a cash benefit. If an employee pays for an employer's expenditure
and is reimbursed the same amount, there's no FBT liability.
6                                                                 www.ird.govt.nz                                     FRINGE BENEFIT TAX GUIDE
Attributed fringe benefits                                                 Employers
See page 33 for information on attributed benefits.                        An employer is anyone who pays, has paid or will pay salaries, wages,
lump sums or schedular payments. For FBT purposes, the definition
also includes some people who are connected with employers:
Attributed income                                                          •   all partners in a partnership that has employees
The definition of cash remuneration for FBT purposes includes              •   the manager or principal officer of an unincorporated group
any amount of income attributed under the attribution rule. The            •   trustees in an estate or trust
attribution rule applies where a person providing services puts an
entity (trust or company) between themselves and the person who            •   anyone who has control of property, such as the Official Assignee, a
receives those services (the recipient). The person providing the              company liquidator or the trustee of a deceased estate.
services and the trust or company must be an associated person. The
company or trust receives the payment for the services performed by        Employees
the service provider.                                                      Anyone who receives salary, wages, lump sums or any other payment
The attribution rule ensures that the net income (income after             for work is an employee. For FBT purposes, the definition also includes:
expenses) of the entity is treated as the gross income of the service      •   most shareholder-employees
provider. The rule applies only in limited circumstances. For FBT          •   associated persons (such as an employee's husband, wife or child)
purposes, when applying the alternate rate calculations to attributed
•   past earners
benefits received from this entity, the cash remuneration includes the
amount of any attributed income.                                           •   future earners
•   people who receive schedular payments
The rule for attributed income doesn't apply to income year filers
(shareholder-employees) as the due date for this return is aligned         •   people who receive director's fees.
with the end-of-year tax date of the employer, so all necessary income     This means you may have to pay FBT for any benefits provided to these
information would be known by this date.                                   groups.
For information on calculating attributed income, see page 39.             The following people aren't employees for FBT purposes:
•   shareholders who are only formally occupying a role as non-
Cash remuneration                                                              executive directors or company secretaries
For FBT purposes, cash remuneration is:                                    •   partners who receive a salary from their partnership.
•   salary or wages
•   lump sum bonuses
If remuneration is paid to a non-resident employee, the calculation
•   schedular payments
of the amount of tax payable on the remuneration includes any tax
•   income attributed under the attribution rules                          credits as if the employee was a resident for FBT purposes.
•   payments to a specified office holder.
These include amounts from a related employer such as a division or        Fringe benefit-inclusive cash remuneration
branch. Some special conditions apply if you're a major shareholder -
This is the cash remuneration, less the tax calculated on it, plus the
taxable value of all fringe benefits attributed to an employee in the
Non-major shareholder-employee
Cash remuneration covers the items in the list above but doesn't           Quarterly FBT return filers
include cash allowances for work-related costs which, if paid by the
All employers who file quarterly FBT returns have two options when
employee would have been reimbursed by the employer, for example,
paying FBT in quarters 1 to 3:
•   49.25% single rate, or
Major shareholders                                                         •   43% alternate rate.
Cash remuneration includes all the items applying to non-major             If you elected and paid FBT using the alternate rate in any of the first
shareholders, plus interest and dividends received from the employer.      three quarters, you must complete the alternate rate calculation
process in the fourth (final) quarter.
Employers and employees                                                    If you elected and paid FBT using the single rate in quarters 1 to 3,
you've the option of using either the single rate or the alternate rate
For FBT purposes, the definitions of employers and employees are
calculation process in the fourth quarter.
7                                                                        www.ird.govt.nz                                   FRINGE BENEFIT TAX GUIDE
Annual and income year filers                                                     Pooled benefits
Employers who file annual or income year FBT returns have the option              A pooled benefit is a non-attributed benefit which no one employee
to pay FBT using either:                                                          has principally used or enjoyed during the quarter or relevant period of
•     the flat rate of 49.25%, or                                                 the income year.
•     the alternate rate calculation process.
A shareholder-employee is a shareholder and an employee of a
Two options are available when calculating FBT using this process.                company that has no more than 25 shareholders. Any benefit they
1. Full alternate rate                                                            receive as an employee is a fringe benefit and FBT is payable. If
you employ shareholder-employees, you may not have all the cash
If you use this option, you'll need separate calculations for each
remuneration details for these employees to calculate the fringe
employee who receives attributed benefits. Non-attributed benefits are
benefit-inclusive cash remuneration. For example, the shareholder-
pooled and taxed at 42.86% (or 49.25% in the case of benefits provided
employee's salary and wages, where PAYE hasn't been deducted, may
to major shareholder-employees)
not be available because this information is aligned with the income
2. Short form alternate rate                                                      tax filing process.
Under this option, a flat rate of 49.25% is applied to all attributed             For information on calculating FBT for shareholder employees see
benefits. Non-attributed benefits are pooled and taxed at 42.86%                  page 39.
(or 49.25% in the case of benefits provided to major shareholder-
When deciding what rate to use you should consider your situation -
A major shareholder is a person who owns, has the power or control
over, or has the right to acquire, 10% or more of the ordinary shares
or voting rights of a close company. A close company has five or fewer
natural persons who hold 50% or more of the total voting or market
value interest in the company.
If you think this may affect you and you want more information, call us
Non-attributed fringe benefits
Certain benefits don't have to be attributed to the particular
employees who receive them. These benefits are:
•     subsidised transport of a taxable value of less than $1,000 per
employee per year. There's a special rule for this - see page 20
•     employer contributions to superannuation, where ESCT (employer
superannuation contribution tax) doesn't apply, and insurance
funds of less than $1,000 per employee per year
•     benefits from loans on life insurance policies. A special rule applies
- see page 27
•     benefits that can't be attributed to particular employees (eg,
pooled vehicles)
•     benefits provided to ex-employees
•     contributions to a sickness, accident or death fund of less than
$1,000 per employee per year
•     any other benefit with a taxable value of less than $2,000 per
If a benefit in a category is attributed to one employee, all
benefits of that category must be attributed. See page 33 for more
information on non-attributed benefits.
8                                                                      www.ird.govt.nz                                     FRINGE BENEFIT TAX GUIDE
All employers and businesses who provide fringe benefits must file              IR422 - Fringe benefit tax annual return
regular FBT returns. The return is to show the fringe benefits provided
and to calculate the FBT payable.                                               This return is for employers who have elected to file annual returns for
the year to 31 March. It's due on 31 May.
FBT return forms                                                                You can file an annual return if your annual gross PAYE and ESCT
deductions for the previous year are no more than $1,000,000 or you
There are three types of FBT returns: quarterly (IR420), income year            didn't employ any employees in the previous year.
(IR421) and annual (IR422).
Calculation sheets are sent with your returns to help you work out the
value of your fringe benefits.                                                   If you want to change your filing frequency you can either:
You can file your FBT return online in myIR or send us a paper return.           •    complete the fringe benefit election at www.ird.govt.nz
If you choose to paper file, we’ll automatically send you a return before             "Get it done online", or
the due date for filing. If you don't receive your return, call us on            •    call us on 0800 377 772.
0800 377 772. However, it's still your responsibility to file a return by
IR420 - Fringe benefit tax quarterly return
Due dates for elections
There are set dates by which you must make an election to file yearly
You are required to file FBT returns quarterly unless you meet the criteria     returns. These depend on the type of return you want to file, and
outlined below and elect to file yearly returns. The return periods and         whether you're a current or new employer. It's important you make
due dates for quarterly returns and payments are:                               your election by the due date as we can't accept late elections. If your
election is late, we'll notify you. You'll then have to continue filing
Quarters       Return period                          Due date
quarterly returns until the following financial or income year.
1         1 April to 30 June                     20 July
2         1 July to 30 September                 20 October            Annual returns
If you're a current employer, you must make your election by 30 June
3         1 October to 31 December               20 January
in the year for which the election first applies. For example, if you want
4         1 January to 31 March                  31 May                to file your first annual return for the year ended 31 March 2020, you
must make an election by 30 June 2019.
IR421 - Fringe benefit tax income year return                                   New employers must elect by the last day of the first quarter after
starting to employ. For example, if you start employing on 31 October
This return is for companies that have shareholder-employees. It covers         2019, you have to make an election by 31 December 2019 to be able to
the same period as the company's accounting year. The due date for              file a first annual return to 31 March 2020.
filing the return is the same as that for paying end-of-year income tax.
You can file an income year return if:
•     you are a close company and your annual gross PAYE and ESCT
deductions for the previous year are no more than $1,000,000, or
•     you only provide motor vehicles for private use to shareholder-
employees and that benefit is limited to two vehicles, or
•     you were not an employer in the previous year.
9                                                                    www.ird.govt.nz                                     FRINGE BENEFIT TAX GUIDE
Income year returns                                                           You stop employing staff and providing
Existing companies with shareholder-employees can elect to file               fringe benefits
income year returns by the last day of the first FBT quarter in the
You'll need to file a final FBT return to cover the period up to the date
income year for which the election applies. For example, a company
you stopped employing - see page 36.
with a 30 September balance date would have to elect by 31 December
2019 to file a return for the year ending 30 September 2020.                  You might stop employing but still provide benefits to past employees
or shareholder-employees. In this case, you must file FBT returns until
Companies that are new employers must elect by the last day of the
you stop providing benefits. The same rules apply if you cease business
first quarter which they started employing in, within the income year
but still provide benefits - you must file FBT returns until you stop
the election applies for. For example, a company with a 30 June balance
date starts employing on 31 July 2019. The company must make an
election by 30 September 2019 to file its first income year return for the    For low-interest loans (see Part 5) you must file returns until the total
year ending 30 June 2020.                                                     loan is repaid.
If your situation changes in any of the following ways, you need to let        If you don’t provide, or don’t intend to provide fringe benefits
us know.                                                                       throughout the year, you can apply for nil status. You can do this by:
•    completing the fringe benefit tax election online at
www.ird.govt.nz "Get it done online", or
You start providing fringe benefits
•    calling 0800 377 772.
If you've previously told us that you don't need to file FBT returns and
you start providing or are going to provide fringe benefits, please call us
on 0800 377 772 so we can register you and send you the returns you
Deregistering a charity
A charity that is deregistered will no longer be eligible for the FBT
exemption. FBT rules will apply from the date of deregistration.
You stop providing fringe benefits but
continue to employ staff                                                      A charity that has wound up voluntarily will lose their FBT exemption
from the date it's removed from the charities register and FBT will be
If you file quarterly returns and provided fringe benefits in quarters 1,     applicable for the return period from this date.
2 or 3, you're required to continue filing quarterly returns up to, and
including, the fourth quarter. When you've completed your fourth              A charity that didn't comply with their constitution will lose their FBT
quarter return you can:                                                       exemption from the date of non-compliance and FBT will be applicable
from the return period from this date.
•   write "final return" next to the circles where you're asked to
indicate if the return is for quarter 4 on the IR420, or
•   complete the "not liable" section on the fringe benefit tax election
at www.ird.govt.nz "Get it done online", or
•   call us on 0800 377 772 and let us know that you no longer provide
10                                                                   www.ird.govt.nz                                    FRINGE BENEFIT TAX GUIDE
In this part we explain when a motor vehicle finge benefit arises. We
also show how to complete the FBT taxable value calculation sheet
Exemptions from FBT on work-related
that comes with your FBT return, and tell you what records to keep for        vehicles
An FBT liability won’t arise on any day where a vehicle provided to an
The most important point to remember about FBT and vehicles is                employee is classified as a work-related vehicle.
that as long as a vehicle is made available for private use by employees
(including shareholder-employees) you'll have to pay FBT, whether or          It's important to note that not all business vehicles are work-related
not the vehicle is actually used.                                             vehicles for FBT purposes. To qualify for the work-related vehicles
exemption from FBT all four of the following requirements must be met.
For a fringe benefit to arise the person who makes the vehicle available
to the employee does not have to be the employer. The person can be           1. The vehicle must be a motor vehicle, which is defined as:
someone who:                                                                      • a vehicle drawn or propelled by mechanical power, including a
•      owns the vehicle                                                             trailer, and
•      leases or rents the vehicle                                                • does not include vehicles with a gross laden weight of more than
•      has the right to use the vehicle under an agreement or
arrangement with the employee, or a person associated with the         2. Business identification regularly used by the employer (or owner, if
employee.                                                                 vehicle is rented) must be permanently and prominently displayed
on the exterior of the vehicle. This may include a name, logo
If you're a sole trader or partner in a partnership, you don't pay FBT           acronym or other business identification. Magnetic or removable
when a business vehicle is made available for private use. You need to           signs aren't enough, and neither is signwriting on a removable part
account for the private use of the vehicle by making an adjustment in            of a vehicle (such as a pick-up's removable canopy or a spare wheel
your income tax and GST returns.                                                 cover).
As a sole trader or partner in a partnership you would use a logbook to       3. The exclusive design of the vehicle must be to carry goods, or
keep track of your business use of the vehicle.                                  goods and passengers equally. If the vehicle is designed mainly to
carry passengers, it won’t meet this requirement.
If a vehicle                                                                  Vehicles that may qualify:
is available to…          it may affect…
belonging to…                                                                 • Utes (including extra cabs and double cabs).
any business          an employee               FBT and GST                   • Light pick-up trucks.
• Vehicles with rear doors that are permanently without rear seats
a sole trader         the sole trader           income tax and GST
such as vans, station-wagons, hatchbacks, panel vans and four-
a partnership         a partner                 income tax and GST              wheel drives. This also applies if the rear seats have been welded
down or made unusable because of a permanent fixture, such as
a company             a shareholder-employee    FBT and GST                     shelving, covering the entire rear seat area.
From the 2017-18 income year onwards, a close company can make an                 • Taxis, including sedans and station-wagons (the rear seat
election to apply the rules for determining motor vehicle expenditure               requirement stated above doesn't apply to taxis).
rather than FBT. To qualify, a close company must:                            4. You must notify employees in writing that the vehicle isn’t available
•      have only one or two motor vehicles made available for the private        for private use, except for:
use of shareholder-employees, and                                          • travel between home and work that is necessary in (and a
•      provide no other fringe benefits to any employees.                           condition of) their employment
• travel incidental to business travel (eg, passing by the bank on
To find out more about the rules for motor vehicle expenditure and
the way home from work).
how to make adjustments for private use go to www.ird.govt.nz
(search keywords: business).                                                  We suggest you give employees a separate letter explaining this
restriction rather than simply mentioning it as another clause in an
You can make an election by including a note that the company is              employment contract.
opting out of the FBT rules with your income tax return covering the
year for the year the motor vehicle is:                                       An example of a letter you could give your employees is on the
•      acquired, or
•      first used for business use.
An election is only valid if it is provided by the due date for filing the
While vehicles with a gross laden weight of more than 3,500kg aren’t
income tax return. Once the election is made you can’t return to using
subject to the motor vehicle FBT rules, an unclassified benefit may
the FBT rules for that vehicle unless the vehicle is disposed of or the
arise where the vehicle has been used for private transportation.
close company stops using the vehicle for business use.
As a general rule, as long as you have made a vehicle available for an        You should also conduct and record quarterly checks on each vehicle
employee to use privately, you'll have to pay FBT whether or not your         the exemption is claimed for, to ensure the restriction is being followed.
employee actually uses the vehicle privately.                                 These checks could involve, for example, reviewing petrol purchases
and logbooks. Involving your employees in the checks could serve as
reminders of the restriction on private use.
11                                                                    www.ird.govt.nz                                      FRINGE BENEFIT TAX GUIDE
•     The services must be requested by a member of the public, the
Example                                                                          employer or their client or customer.
James, the chief mechanic, is given an Audi A4 station-wagon as a          •     If the visit is on a normal working day (not a Saturday, Sundays or
work-related vehicle. The A4 has permanent signs, the rear seats                 statutory holiday) it must take place between 6pm and 6am. If the
have been removed and cabinetry built to carry essential tools if                visit relates to health or safety, there are no time restrictions.
he’s called out. He’s received a letter (see below) advising him the
Audi isn’t available for private use.
An exemption from FBT may apply when an employee is required to
Partial exemption                                                              travel on a regular basis with a vehicle, and the following conditions are
If a vehicle meets the four conditions listed, it will be a work-related       met:
vehicle. However, if you decide to allow some private use on certain           •     The length of the trip is more than 24 hours.
days, such as Saturdays, Sundays and statutory holidays, you can have a        •     Use of the vehicle is required for the employee to perform their
partial exemption. This means the vehicle is not a work-related vehicle              duties.
on those days and you would pay FBT on those days in each quarter.             •     The employee must be absent from home with the vehicle for the
This would be particularly useful for employees who are on call and                  exemption to apply.
need their vehicles with them for emergency callouts.
Emergency calls                                                                    Mark has an Audi A4 station-wagon that is available for unlimited
The whole of any day on which the vehicle is used to attend an                     private use. Mark regularly travels outside of Wellington to perform
emergency call is exempted if:                                                     specialist repairs on clients’ vehicles. He is often away from home
•     the employee makes the visit from their home while working, and              overnight when visiting multiple clients or making difficult repairs.
Days where Mark is absent from home with the vehicle for more
•     the purpose of the visit is to provide emergency services.
than 24 hours while working, will qualify for a business travel
These services must meet the following conditions.                                 exemption.
•     The services must be relating to the health or safety of any person
or essential services for one of the following:
- plant or machinery operation of the employer, their client or
- maintenance of services provided by a local or public authority or
- the carrying on of a business which provides energy or fuel
supply to the public.
Audis on Anglesey Ltd
563 Goodyear Street
Vehicle private use restriction
As you know you’ve been provided with the Audi A4 station-wagon, registration number CFK917, as required in your
role with us. However, this vehicle is for business use and isn’t available for private use during the week or the weekend,
-   are travelling between home and work, or
-   have any incidental travel while using the station-wagon on Audis on Anglesey Ltd business.
We have to ask you to do this for fringe benefit tax reasons. We will also conduct checks at least once a quarter to ensure
that you’re observing this restriction.
12                                                                  www.ird.govt.nz                                     FRINGE BENEFIT TAX GUIDE
Vehicles parked at airport carparks                                          Three-month test period
If an employee parks a vehicle at an airport while they travel by plane      Using a three-month test period means that instead of recording every
to another destination, the business travel exemption won’t apply, as        exemption a vehicle qualifies for over its whole life, you can keep these
the employee is not "with" the vehicle. Whether any FBT is payable will      full records for just three months.
depend on whether you have made the vehicle available for private use.
You can then use the result of the test to calculate your FBT for that
The day of departure and the day of return will be subject to FBT unless     vehicle for a three-year application period, after which you'll have to
the employee has been restricted from using the vehicle for private          run another test period. The records you must keep are outlined on
travel.                                                                      page 17.
Any days between the employee’s departure and return will be exempt          Remember, you'll have to pay FBT as long as the vehicle is available for
from FBT, as you have removed the employee’s access to the vehicle by        private use, whether or not it's actually used.
requiring them to fly on business.
The table below shows when you must run your test period, and when
the three-year application starts.
You must keep adequate records to support the exemptions claimed.             Filer           Test covers                     Three-year period
See page 17 or go to www.ird.govt.nz (key words: FBT motor vehicles).                                                         starts
quarterly       one full quarter                first day of that quarter
Other days not liable
annual          one full quarter                1 April of the year the
From time to time vehicles will be unavailable to the employee, eg, if                                                        test is in
the vehicle has broken down or is being repaired. The vehicle must be
unavailable to the employee, or any of their associates, for at least one     income year     any three consecutive           first day of the income
complete 24-hour period before you can claim an exemption. These                              months in the income year       year the test is in
days will qualify for an exemption as long as there's a valid reason
recorded for the vehicle's unavailability.                                   The test period must fairly represent when you expect the vehicle
will be available for private use by your employee over the three-year
period. If the actual number of exempt days in any quarter, year or
Election of the commencement of a                                            income year is 20% higher than the test period result, the application
period will end on the last day of that quarter, year or income year. If
24-hour period                                                               we consider the test period result isn't representative of the exempt
You can elect the start time for an FBT day to reflect your business         days, we may reject it. You'll then have to run another test period.
This removes the anomaly where two days' FBT could be incurred
when a vehicle was taken home overnight.                                      Flynn can use an Audis on Anglesey Ltd’s vehicle for private use on
If you elect a start time other than midnight you’ll need to apply it to      Saturdays, Sundays and statutory holidays. The vehicle qualifies
all vehicles owned or leased, and the election will normally last two         for the work-related vehicle exemption on other days. Audis on
years.                                                                        Anglesey decided to run a test period in the September quarter. In
that quarter Flynn had six callouts that qualified for the emergency
To make an election, write the start time elected on your next FBT            call exemption. Flynn also had to spend a weekend out of town for
return. The election will become effective from the start of the quarter,     a conference (leaving on Friday and returning on Monday). This
income year, or tax year which we receive notification in.                    travel qualified for the business travel exemption. These are Audis
on Anglesey’s records.
This provision will particularly benefit you if you occasionally allow
employees to take vehicles home overnight.                                    Number of days in the quarter                                        92
Number of liable days (Saturdays, Sundays etc)                       26
You may apply to amend the start time of the 24-hour period if your
circumstances have changed in a way that:                                     Number of callouts on liable days that qualified for the
emergency call exemption                                                  6
•    is more than minor, and
Number of callouts on weeknights                                          3
•    the starting time is no longer relevant to the business.
Business travel that qualified for the business travel exemption          2
To amend the start time, write the new elected start time on your next
FBT return.                                                                   The number of days the vehicle was made available for private use
(subject to FBT) in this test period was 18 (26 - 6 - 2). In this case,
18 days can be used in each quarter in the three-year application
period. As the vehicle qualifies for the exemption for work-
related vehicles on weekdays, the three weeknight callouts were
disregarded as those days were already exempt.
Only two days were counted as out-of-town travel days, as the
Friday and Monday involved were already covered by the work-
related vehicle exemption.
13                                                                      www.ird.govt.nz                                     FRINGE BENEFIT TAX GUIDE
Exemption days                                                                   A minimum tax value of $8,333 applies to this option, meaning that
once the tax value of the vehicle falls below $8,333, the taxable value of
The number of days in each quarter varies when deducting exempt                  the vehicle must be calculated on $8,333. This is to reflect the on-going
days from the total of liable days. You must deduct the number of                benefit the employee receives by the vehicle being made available for
exempt days from the actual number of days in the quarter.                       private use, even when the vehicle has depreciated significantly.
The actual number of days in each quarter are:                                   Once an employer has chosen between the cost price and tax value
June quarter (Apr, May, Jun)                                               91    options in the first FBT return for the vehicle, they must continue to
September quarter (Jul, Aug, Sep)                                          92    use their chosen option until at least the earliest of the following:
December quarter (Oct, Nov, Dec)                                           92    •   the date the vehicle is sold
March quarter (Jan, Feb, Mar)                                              90    •   the date the vehicle ceases to be leased, or
•   the date when five years has elapsed from the start of the period of
There are 91 days in the March quarter in leap years.                                the first return.
Motor vehicle valuation methods                                                  Motor vehicle cost price or tax value?
You have two options for valuing motor vehicles. FBT can be calculated           If you provide motor vehicles for private use, choose the option (cost
on either the cost price or the tax value.                                       price or tax value) that benefits you most. The tax value method costs
Both FBT valuation methods may be calculated on a GST-inclusive or               more in the initial years when compared to the FBT payable under the
GST-exclusive basis.                                                             cost price option. However, the tax value method is of benefit if you
intend to retain your motor vehicles for longer than five years.
The cost price of a motor vehicle includes any initial costs of getting
the vehicle on the road.                                                         If you lease a vehicle from any person, whether associated or not, you
can calculate FBT on either the cost price or tax value.
In addition to the purchase price of the vehicle, the cost price includes:
If you're unsure of the cost price or tax value you'll need to ask the
•     initial registration costs and licence plate fees
lessor, who is required to disclose the relevant values to you.
•     any extras fitted, such as a CD player, a sunroof or towbar
If you lease a vehicle that has previously been leased to another person,
•     any initial transportation costs for the vehicle, such as freight and
the vehicle cost price is the market value if:
•   the vehicle you're leasing wasn't previously leased by an associated
This doesn't include items such as financing the purchase of the vehicle             person, and
or annual re-licencing fees. Any trade-in value shouldn't be subtracted
•   you're not associated with the lessor or owner of the vehicle, and
from the cost price.
•   your employee isn't the lessor or owner of the vehicle, and
The table below shows the FBT valuation rates when using cost price.
•   your employee isn't associated with the lessor or owner of the
Return filing                 GST-inclusive           GST-exclusive              vehicle.
cost price              cost price
Annual or income year                 20%                   23%              Vehicle acquired at no cost or less than
Quarterly                             5%                   5.75%             market value
If you received a vehicle at no cost, or for less than market value, or at
a cost that can't be determined from an associated person, the value of
Tax value                                                                        the vehicle is the higher of:
The motor vehicle's tax value is:                                                •   the original purchase price the associated person paid, or
•     the original cost price less the total accumulated depreciation of         •   the current market value.
the vehicle as at the start of the FBT period, or
Market value is the price that would normally be paid for the motor
•     the cost of the vehicle if acquired after the beginning of the tax
vehicle in the open market at the time the employee receives the fringe
benefit. You must have records to support the market value used.
The table below shows the FBT valuation rates when using the tax value.
Return filing                 GST-inclusive tax       GST-exclusive
value                   tax value
Annual or income year                 36%                  41.40%
Quarterly                             9%                   10.35%
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Determining the value of pooled                                               Calculating the taxable value of
motor vehicles                                                                private use of a motor vehicle
If there's a pool of vehicles available for an employee to use, work out      Where FBT returns are filed quarterly the value of a fringe benefit (the
the value of each vehicle from the table below.                               private use or enjoyment of a motor vehicle, or the availability for that
use) is:
If the…                                        use the…
employee uses mainly one vehicle               value of that vehicle                        90
employee doesn’t mainly use the same           highest value of any of       Where:
vehicle, and the employer’s business isn’t     the vehicles in the pool      Y is the lesser of:
selling cars                                                                 (i) the number of days the vehicle is available for private use*, or
employee doesn’t mainly use the same           average value of all the      (ii) 90.
vehicle, the employer's business is selling    vehicles in the pool          Z is either:
cars, and the vehicles in the pool are
(i) 5% of the GST-inclusive, or 5.75% of the GST-exclusive cost price of
the motor vehicle owned or leased by the employer, or
(ii) 9% of the GST-inclusive, or 10.35% of the GST-exclusive tax value of
Example                                                                           the motor vehicle.
Audis on Anglesey Ltd has a pool of four vehicles (trading stock)
*Calculation of Y
valued at $17,800, $18,900, $25,600 and $32,500.                             When calculating the number of days a vehicle is available for private
use, you must deduct the number of exempt days from the actual
The average value of all the vehicles in the pool has been used
because Audis on Anglesey Ltd is in the business of selling cars and
the vehicles in the pool are trading stock.
The vehicles were all available for use by employees. No employee            March quarter
uses any particular vehicle, so the value for all the vehicles is the        January (31 days) + February (28 days) + March (31 days)         = 90 days
average value of all the vehicles in the pool ($23,700).
(91 days in a leap year)
The vehicles are available for private use for 90 days in the March
quarter. The taxable value is:
number    average value            number of available days
April (30 days) + May (31 days) + June (30 days)                 = 91 days
×                ×                           × 5%
of cars    of cost price   number of days in quarter
4   ×   $23,700     ×            ×    5%    = $4,740                     July (31 days) + August (31 days) + September (30 days)          = 92 days
October (31 days) + November (30 days)+ December (31 days) = 92 days
If there are exempt days for any of the vehicles, complete an
individual calculation for each one to work out the taxable value for         Example
the pooled vehicles.
The table below shows the variances in the taxable values used for
calculating an employer’s fringe benefit liability using either the cost
Example                                                                       price or the tax value options.
Tax value option                                                                                 Cost price                Tax value
Audis on Anglesey Ltd own the vehicles (no longer trading stock)                                                 × 5% =                  × 9% =
and no employees use a particular vehicle. However, all employees               Employee Cost price                         Tax value
taxable value           taxable value
used the highest value vehicle at least once during the year. They
Allan             $132,900    $6,645        $85,056    $7,655
calculate FBT using the tax value option based on the tax values of
$9,000, $13,000, $18,000 and $26,000:                                           Karyn             $ 84,900    $4,245        $54,336    $4,890
highest tax value    number of available days                     Michael           $ 89,900    $4,495        $57,536    $5,178
× of all vehicles in ×                           × 9%               Zac               $ 74,900    $3,745        $47,936    $4,314
of cars                            number of days in quarter
Nicole            $ 40,000    $2,000        $25,600    $2,304
4   ×   $26,000     ×            ×    9%    = $9,360                        Flynn             $ 32,000    $1,600        $20,480    $1,843
Total                         $22,730                  $26,184
15                                                                    www.ird.govt.nz                                    FRINGE BENEFIT TAX GUIDE
Note                                                                          Employee contributions
If you choose the tax value option, regardless of the book value in           If the employee makes any payment in return for having a fringe
the financial accounts being less than $8,333, the taxable value for          benefit, the payment is deducted when working out the taxable value
calculating the fringe benefit will remain at $8,333.                         of the benefit.
Tax value has been calculated using depreciation at 36% for a
12-month period.                                                              Employees paying for fuel
If the employee pays for some of the fuel, they must give you a receipt
for each contribution. The receipt or tax invoice must meet the normal
Annual and income year returns                                                 receipt requirements and include the vehicle's registration number. You
If you file annual returns, calculate the value of the benefit for the         can't claim the GST paid or the amount as an expense against income.
year by adding the sum of the amounts calculated using the quarterly           The contributions should be deducted when working out the taxable
formula for each of the four quarters in the applicable year.                  value. If the employee pays for expenses and is reimbursed by you, the
If you file income year returns, calculate the value of the benefit for the    value of the fringe benefit remains unchanged.
Y×Z       =   taxable value
365                                                                 Michael has unlimited use of his Audi A4 and decides to visit
his relatives in Taupo. His petrol costs $170 and he pays for this
Y is the lesser of:
The calculation for FBT on the cost price option would be:
(i) the number of days during the year the vehicle is available for
private use, or                                                             $89,900 × 90 × 5%
− $170 = $4,325
(ii) 365.
(i) 20% of the GST-inclusive, or 23% of the GST-exclusive cost price of        Direct payment to the employer
the motor vehicle, or                                                      A direct payment to the employer by the employee must be recorded
(ii) 36% of the GST-inclusive, or 41.40% of the GST-exclusive tax value        by the employer as income for both GST and income tax purposes. The
of the motor vehicle.                                                     contribution from the employee is deducted when working out the
Cost price                                                                    A shareholder-employee makes a
Audis on Anglesey Ltd completed its income year return and Allan              contribution by a current account
had unlimited availability of the company’s Audi A6 that cost
$132,900. During the year Allan had 75 exempt days when the                   adjustment
vehicle was not available for private use.                                    This is acceptable if the appropriate journal entries are made and are
There are 365 days in the year (except in a leap year):                       effective on or before the last day of the FBT period (the last day of
each quarter, or the last day of the annual or income year period).
365 days − 75 days = 290 (Y)
Cost price $132,900 × 20% = $26,580 (Z)
The employee part-owns the vehicle
The taxable value of the fringe benefit is:
290 (Y) × $26,580 (Z)                                                         In this situation, 2.5% of the employee's contribution to the cost price
= $21,118                                    can be deducted from the value of the benefit in each quarter. For
income year returns, 10% of the employee's contribution is deducted.
If the period covered by the return is less than a normal income year,
calculate the amount as:
Tax value                                                                     number of days covered by the return
Using the previous example where the tax value of the Audi A6 is                            365 days
$85,056 the calculation would be:
365 days − 75 days = 290 (Y)                                                   Note
Tax value $85,056 × 36% = $30,620 (Z)
Only the amount paid for the use of the vehicle itself can be
The taxable value of the fringe benefit is:                                    deducted here, and only if there’s an actual cost to the employee.
290 (Y) × $30,620 (Z)
= $24,328
365                                                            Any indirect costs, such as garaging or costs for which there has been
no payment, such as the employee doing some servicing of the vehicle
at home, can't be deducted.
16                                                                                                  www.ird.govt.nz                                                                  FRINGE BENEFIT TAX GUIDE
1                                 2                                   3                     4                       5                    6                       7               8
Employee’s name or "pooled"      Make, model, year of manufacture          1
Original cost price        Tax value
No of days      †
Value of benefit         Recipient’s    Taxable value
- if pooled vehicles            and registration number                (whether owned or       (owned or leased)        available for                                contributions    (6 minus 7)
leased)                                     private use
Allan                          2008 Audi A6               CDEF3                     132,900                                         87               6,423    50                            6,423        50
Karyn                          2008 Audi TT               KLMN5                      84,900                                         82               3,867    66                            3,867        66
Michael                        2008 Audi A4                GHIJ4                     89,900                                         90               4,325    00                170 00      4,325        00
Zao                            2008 Audi A4               OPQR6                      74,900                                         90               3,745    00                            3,745        00
Nicole                         2006 Audi A4               BLDE2                      40,000                                         90               2,000    00                            2,000        00
Flynn                          2005 Audi A4               ABCD1                      32,000                                         18                 320    00                              320        00
Pooled vehicles                                                                      23,700                                         90               4,740    00                            4,740        00
Total taxable value Copy this amount to Box A below.                                                       A     25,421        16
You can calculate the fringe benefit value of motor vehicles based on either the vehicle’s tax value              Total motor vehicle taxable value from Box A above                        A      25,421 16
or its cost price. Having made your choice between the cost price and tax value options, you must
continue to use your chosen option until either:                                                                  Total goods and services taxable value from Box B on page 2               B
• the vehicle is sold
• the vehicle ceases to be leased, or                                                                             Total subsidised transport taxable value from Box C on page 3             C
• a period of five years has elapsed.
Cost price (Box 3) × days (Box 5) × 5%*           Tax value (Box 4) × days (Box 5) × 9%**                          Total low-interest loans taxable value from Box D on page 3               D
*	If vehicle cost excludes GST:                  **	If vehicle book value excludes GST:                          Total insurance and superannuation taxable value from Box E on
5.625% for quarters ending up to and including     10.125% for quarters ending up to and including              page 4
30/09/2010                                         30/09/2010
5.75% for quarters ending after 01/10/2010         10.35% for quarters ending after 01/10/2010                  Total taxable value Add the amounts in Boxes A to E, print your
The minimum value of $8,333 must be used to calculate the taxable value once the vehicle’s tax
†                                                                                                              answer in Box F. Copy this amount to Box 3 on your return.
value has depreciated to less than this amount.
Motor vehicles                                                                                                       Column 6
It's a good idea to list your employees' names in the same order for all                                             Write the value of the fringe benefit using either the cost price or tax
your calculation sheets.                                                                                             value option.
Column 1                                                                                                             Column 7
Write the name of the employee receiving the benefit of the car or note                                              Write the total contributions made by the employee.
that it's a pooled vehicle.
Column 2                                                                                                             Subtract column 7 from column 6 and enter the result.
Write details to identify each vehicle - the registration number, make
and model and year of manufacture.                                                                                   Box A
Add up the amounts in column 8 and enter the total in Box A. This is
Column 3                                                                                                             your total taxable value for motor vehicles.
Write the original cost price of the vehicle, whether owned or leased.
Write the tax value of the vehicle, whether owned or leased.
Write the number of days the vehicle was available for private use.
17                                                                    www.ird.govt.nz                                     FRINGE BENEFIT TAX GUIDE
Record keeping                                                                 Emergency call exemption
For any emergency call exemption claims, you should record and keep:
Vehicle available for private use                                              •   the purpose of the call
If you provide a vehicle that's made available for private use you need        •   details of the services provided
to keep sufficient records to:                                                 •   when the service was performed, eg duration, time employee left
•    identify the specific motor vehicle                                           and returned home, why the services had to be performed at that
•    support the market value or cost price                                        time
•    have working papers showing how the liable days are calculated for        •   customer/client details
each quarter, with supporting documentation for any exempt days           •   details of the employee and vehicle.
(if there are no exempt days in a quarter you don't need to keep a
record of days)                                                           Business travel exemption
•    maintain copies of any private use restriction (usually a letter or
notice)                                                                   For any business travel claims, you should record and keep:
•    include working papers showing how the total of any employees'            •   the purpose of the travel
contributions for each quarter was calculated, with supporting            •   proof that the travel was for longer than 24 hours
documentation.                                                            •   number of days that qualified for the exemption
•   details of the employee and the vehicle.
You'll need to keep these records for any work-related vehicle:
•    a description of the vehicle to show that it qualifies for the
•    a copy of the private use restriction (letter or notice)
•    records of the quarterly checks required to ensure the vehicle isn't
used for unauthorised private use.
The types of records show the requirements that must be met for a
vehicle to qualify for the work-related vehicle exemption - see pages 10
Work-related vehicle partially available for
For work-related vehicles that are partially available for private use, a
copy of the written restriction stating this must be held by the employer.
Remember that the actual days the motor vehicle is available must
be stated, ie, Saturdays, Sundays or statutory holidays. They can't, for
example, be any two days per week, as this would mean the vehicle is
available on any day, and full FBT would apply.
18                                                                     www.ird.govt.nz                                        FRINGE BENEFIT TAX GUIDE
Part 4 - Free, subsidised or discounted goods and services
This part explains how to deal with free, subsidised or discounted              Private use and the availability for private use of employer-owned or
goods and services. It also explains how entertainment expenses fit in          leased business tools will be exempt from FBT where the tools are
with the FBT rules.                                                             mainly provided for business purposes. The cost of each tool must not
The three main types of fringe benefits in this category are goods,
services and subsidised transport.
Benefits provided to shareholder-employees                                          Nicole has been given a laptop costing $2,900 (GST-inclusive).
She uses it mostly for work but has also used it for completing
A company providing any of the benefits discussed in this part to                   assignments and researching on the internet.
shareholder-employees may pay FBT on them or elect to treat them as
As the laptop is mostly used for business, no fringe benefit liability
arises for the personal use. If the value of the laptop had exceeded
If you choose to make this election, you must let us know in writing on             $5,000 the exemption wouldn’t apply.
the FBT return this relates to. If you don't make an election the benefit
will be treated as a fringe benefit.
Benefits from undertaking hazard management initiatives such as
protective clothing or health checks won't incur an FBT liability for any
GST and the value of the fringe benefit                                         benefits that arise out of that management, irrespective of where the
benefit is provided.
You must use the GST-inclusive cost of free, subsidised or discounted
goods and services.                                                             To qualify, the measures must be aimed at addressing hazard
management in the workplace as outlined in the Health and Safety at
Work Act 2015. It doesn't extend to items such as gym subscriptions or
Goods                                                                           employer-paid health insurance premiums.
Goods subject to FBT                                                                Example
If goods are provided for an employee at less than the cost to you, this            Flu injections were provided on site to all employees of Audis on
is a fringe benefit. The cost to you is usually the price paid to purchase          Anglesey Ltd, but Nicole, James and George weren’t available on
those goods.                                                                        the arranged day. Each went to their own doctor to receive the
However, if you manufactured, produced or processed the goods, the                  vaccination and the company paid the fees. As the company was
cost is the lowest price at which identical goods are sold by you to                complying with its health and safety obligations no fringe benefit
other customers (wholesale or retail).                                              was incurred on any of the vaccinations.
Example                                                                     Discounted goods or the provision of services to employees by a third
party under an arrangement with the employer, won't be liable for FBT if:
If a soft drink producer provides free soft drink for employees to
•     the discount offered is no more than that offered to comparably
take home, FBT would be charged.
sized groups, and
•     the discount is undertaken on an arm's-length basis.
Goods not subject to FBT
If the sale price of the goods to the employee is not less than the cost
to the employer, FBT will not be charged.
If an item that usually retails for $200 or less and is on "special" to
Services subject to FBT
the public and sold at discount to an employee at the normal staff              If services are provided to an employee at less than the normal cost to
discount rate, it isn't considered a fringe benefit. This only applies if the   the public, this is a fringe benefit.
price paid by the employee is more than:                                        These include gifting schemes, such as long-service awards, incentive
•     95% of the cost price to the employer, or                                 vouchers or gifts, club memberships, accompanying travel by the
•     95% of the selling price to the public, if a reasonable quantity of       employee's spouse or family, and other such benefits.
identical goods are available on special to the public                    If you pay for an employee's partner and/or family to visit them at their
whichever is the lesser amount.                                                 temporary workplace, it may be exempt from FBT. To qualify for the
There's another exemption for goods not on "special" that are sold to           exemption, the value of the travel must not exceed the amount that
employees at less than cost price. This applies when:                           would have been provided as a tax-free allowance to the employee if
they travelled home instead.
•     the goods are sold as part of the employer's normal business, and
•     the normal retail price of the goods is $200 or less, and
•     the discount is the usual staff discount, and the staff discount isn't
more than 5% of the sale price to the public.
If these conditions are met, the goods aren't subject to FBT.
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