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Income Tax Act 2007

General collection rules - Employment-related taxes - Value of fringe benefits

RD 41: Services

You could also call this:

“Rules for valuing services given as fringe benefits by employers”

When your employer gives you a service as a fringe benefit, its value is determined in different ways depending on the situation.

If your employer usually provides these services as part of their business, the value is the price they would charge the public for the same or similar services. This price should be what they’d normally charge at the time they gave you the service, and it should be based on regular business terms between independent buyers and sellers.

If your employer pays someone else to provide the service for you, and they’re dealing with that provider independently, the value is simply the amount your employer paid.

If neither of these situations applies, the value is what your employer or the service provider would have charged the public for the same or similar services. This should be based on regular business terms in the open market in New Zealand at that time.

These rules don’t apply to services like letting you use a company car for personal reasons, giving you a work-related loan, or providing subsidised transport.

Sometimes, your employer might provide services to a group of employees. In this case, it’s treated the same as if they were providing services to the public if they offer the same or similar services to a comparable-sized group who negotiate independently.

For registered persons who can claim input tax, ‘amount’, ‘fee’, and ‘price’ in these rules include GST.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520053.

Topics:

Money and consumer rights > Taxes

RD 40: Goods, or

“How your employer values goods given to you as a benefit”

RD 42: Goods at staff discount, or

“Rules for goods sold to employees at a discount”

Part R General collection rules
Employment-related taxes: Value of fringe benefits

RD 41Services

The value of a fringe benefit that an employer provides to an employee in services is,—
when an employer normally provides the services as part of their business, the price charged by the employer—
1. at the time they provided the services; and
2. for the same or similar services to the public in the open market in New Zealand; and
3. on ordinary trade or professional terms between buyers and sellers independent of each other:
when an employer pays for the services to be provided, dealing at arm’s length with the supplier of the services, the amount paid or payable:
if neither paragraph (a) nor (b) applies, the price or fee that the employer or supplier providing the services would at that time have charged the public, had they provided the same or similar services to the public in the open market in New Zealand on ordinary trade or professional terms.

This section does not apply to a service that consists of making available a motor vehicle for private use, providing an employment-related loan, or providing subsidised transport.
For the purposes of this section, a person who provides services to an employee belonging to a group of employees is treated as providing the same or similar services to the public in the open market in New Zealand on ordinary trade or professional terms if the person provides the same or similar services to a group of persons that—
negotiates the transaction on an arm’s-length basis; and
is comparable in number to the group of employees.

In this section,—
amount, for a registered person who may claim input tax for that service, means the GST-inclusive amount
fee and price, for a registered person who may claim input tax for that service, means the GST-inclusive fee or price.

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2004 No 35 s ND 1K