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Income Tax Act 2007

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

RD 45: Unclassified benefits

You could also call this:

“Tax on certain employee benefits that don't fit into specific categories”

You need to pay a tax called Fringe Benefit Tax (FBT) on some benefits you give to your employees. These benefits are called ‘unclassified benefits’. However, you only have to pay this tax in certain situations.

If you pay FBT every three months, you have to pay it on unclassified benefits if:

  • The total value of all unclassified benefits you (or people connected to you) gave an employee in those three months is more than $300, or
  • The total value of all unclassified benefits you (or people connected to you) gave to employees in the last year is more than $22,500.

If you pay FBT once a year, you have to pay it on unclassified benefits if:

  • The total value of all unclassified benefits you (or people connected to you) gave an employee in the year is more than $1,200, or
  • The total value of all unclassified benefits you (or people connected to you) gave to employees in the year is more than $22,500.

Sometimes, your FBT year might be longer or shorter than a normal year. This can happen if you started or stopped your business during the year, or if you agreed with the tax office to use different dates. In these cases, the $1,200 and $22,500 limits change. They go up or down based on how many days are in your FBT year.

When we talk about ‘people connected to you’, we mean other businesses that are linked to yours in some way. This could be other companies in your group, or businesses run by people associated with you.

If you want to know more about how to account for FBT, you can look at section RD 60.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520066.

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

RD 45Unclassified benefits

  1. An employer is liable to pay FBT on an unclassified benefit only within the limits described in this section.

  2. When FBT is paid quarterly, an employer is liable for FBT on an unclassified benefit provided to an employee in a quarter only if—

  3. the total taxable value of all unclassified benefits provided in the quarter to the employee by the employer, or by persons associated, at any time in the quarter, with the employer, is more than $300; or
    1. the total taxable value of all unclassified benefits in the categories described in subsection (4) provided in the last 4 quarters including the current quarter, whether accounted for on a quarterly or an income year basis, is more than $22,500.

      1. When FBT is paid on either an annual basis or an income year basis, except when subsection (5) applies, an employer is liable for FBT on unclassified benefits provided to an employee in the tax year or income year only if—

      2. the total taxable value of all unclassified benefits provided in the tax year or income year to the employee by the employer, or by persons associated, at any time in the tax year or income year, with the employer, is more than $1,200; or
        1. the total taxable value of all unclassified benefits in the categories described in subsection (4) provided in the tax year or income year is more than $22,500.

          1. The categories, for an employer, are—

          2. unclassified benefits provided by the employer to their employees:
            1. unclassified benefits provided by persons associated, at any time in the relevant period, with the employer to employees of the employer:
              1. unclassified benefits provided by the employer to employees of persons associated, at any time in the relevant period, with the employer:
                1. if the employer is a company, unclassified benefits provided by other companies that are part of the same group of companies as the employer, at any time in the relevant period, to employees of those other companies.

                  1. When an employer accounts for FBT on an income year basis, and the period for which they have accounted under section RD 60 differs from an income year for the reasons described in subsection (6), an employer is liable for FBT on unclassified benefits provided in the period only if—

                  2. the total taxable value of all unclassified benefits provided in the period to an employee by the employer, or by persons associated, at any time in the quarter, with the employer, is more than the figure that is the same fraction or multiple of $1,200 as the number of days in the period is a fraction or multiple of 365; or
                    1. the total taxable value of all unclassified benefits in the categories described in subsection (4) provided in the period is more than the figure that is the same fraction or multiple of $22,500 as the number of days in the period is a fraction or multiple of 365.

                      1. In subsection (5), the income year for which the employer has accounted may be longer or shorter than the normal income year because the employer has either—

                      2. started or ceased business during that income year; or
                        1. chosen, with the agreement of the Commissioner, to file a return under this subpart for the income year ending with the date of the annual balance of their accounts.

                          Notes
                          • Section RD 45: replaced, on , by section 154(1) (and see section 154(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).