Small Business Tax Dictionary
Fringe Benefit Tax (FBT) — NZ
Fringe Benefit Tax (FBT) is a tax in New Zealand on non-cash benefits provided to employees or their associates. It is paid by the employer and is separate from income tax.
What counts as a fringe benefit?
Common examples of fringe benefits subject to FBT in New Zealand include:
- Company vehicles — when used for private purposes by an employee
- Low-interest loans — when an employer lends money to an employee at below-market interest rates
- Subsidised housing — accommodation provided at below-market rates
- Free or subsidised goods and services — products or services provided by the employer to employees
Who pays FBT?
FBT is the employer's obligation, not the employee's. Employers must calculate, report, and pay FBT to Inland Revenue (IRD). The frequency of FBT returns depends on the size of the employer's payroll.
Why FBT compliance matters
Managing FBT appropriately supports fair employment practices and maintains compliance with New Zealand tax laws, contributing to transparent and responsible business operations. Failing to account for FBT correctly can result in penalties and interest charges.