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RD 49: Application of thresholds to attributed benefits
or “How thresholds affect the tax treatment of certain employee benefits”
You could also call this:

“Employers must pay tax on fringe benefits given to employees”

You need to know about an employer’s responsibility for fringe benefits given to employees. When an employer gives fringe benefits to an employee, they have to pay a tax called FBT. The amount of FBT depends on the value of the fringe benefits and the employee’s pay.

To work out the FBT, the employer uses a formula. This formula takes into account the employee’s total pay (including the value of fringe benefits) and the tax on their cash pay. The difference between these two amounts is the FBT the employer must pay.

In some cases, employers can choose to pay FBT at a flat rate of 63.93% on the value of the fringe benefits. There’s also a special rule for employees with lower pay and fewer fringe benefits. For these employees, employers can pay FBT at a lower rate of 49.25%.

If an employee’s total pay (including fringe benefits) is less than $129,681, the employer can choose to pay the lower rate of 49.25% FBT.

Remember, the exact rules and rates may change, so it’s important to check the most up-to-date information if you need to know more about FBT.

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Next up: RD 51: Calculation of all-inclusive pay

or “How to work out an employee's total pay including benefits”
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Part R General collection rules
Employment-related taxes: Attributing fringe benefits to employees

RD 50Employer’s liability for attributed benefits

  1. This section applies when an employer is required to attribute the value of a fringe benefit to an employee under sections RD 47 and RD 49.

  2. The employer’s FBT liability in relation to the employee is the amount calculated using the formula—

    tax on all-inclusive pay − FBT on net cash pay.

    Where:

    • In the formula in subsection (2),—

    • tax on all-inclusive pay is the amount determined at the rate set out in schedule 1, part C, table 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits) on the amount of the employee’s all-inclusive pay calculated using the formula in section RD 51(2):
      1. FBT on net cash pay is the amount determined at the rate set out in schedule 1, part C, table 1 on the amount of the employee’s net cash pay calculated using the formula in subsection (3B).

        1. For the purposes of subsection (3)(b), the employee’s net cash pay is the amount calculated using the formula—

          cash pay − tax on cash pay.

          Where:

          • In the formula in subsection (3B),—

          • cash pay is the amount calculated under section RD 51(3)(a) or (4)(a):
            1. tax on cash pay is the amount calculated under section RD 51(3)(b) or (4)(b).

              1. If the employer has an exception for an employee under section RD 52 in a tax year, and the employer pays FBT at the rate of 49.25% of the taxable value of the attributed fringe benefits under section RD 52(3)(a), the employer must deduct the FBT payable in the tax year from the result of the formula in subsection (2).

              2. Instead of calculating FBT under subsections (2) and (4), an employer may choose to—

              3. pay FBT, for each employee to whom they are required to attribute the value of a fringe benefit under sections RD 47 and RD 49, at the rate of 63.93% on the taxable value of the fringe benefits attributed to the employee; or
                1. apply subsection (6).

                  1. An employer who makes an election under subsection (5) to apply this subsection must—

                  2. pay FBT at the rate of 49.25% on the taxable value of the fringe benefits attributed to the employee, for each employee to whom all of the following apply:
                    1. the employee is an employee to whom the employer is required to attribute the value of a fringe benefit under sections RD 47 and RD 49; and
                      1. the taxable value of all fringe benefits for the employee, as determined under section RD 51, is $13,400 or less; and
                        1. the cash pay of the employee, as determined under that section, is $160,000 or less; and
                        2. for each other employee to whom the employer is required to attribute the value of a fringe benefit under sections RD 47 and RD 49,—
                          1. pay FBT at the rate of 63.93% on the taxable value of the fringe benefits attributed to the employee, if subparagraph (ii) does not apply; or
                            1. pay FBT at the rate of 49.25% on the taxable value of the fringe benefits attributed to the employee, if the employee’s all-inclusive pay, calculated using the formula in section RD 51(2), is less than $129,681 and the employer chooses 49.25%.

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                            Notes
                            • Section RD 50(2) heading: replaced (with effect on 1 April 2024), on , by section 6(1) (and see section 6(2) for application) of the Taxation (Budget Measures) Act 2024 (2024 No 19).
                            • Section RD 50(2): replaced (with effect on 1 April 2024), on , by section 6(1) (and see section 6(2) for application) of the Taxation (Budget Measures) Act 2024 (2024 No 19).
                            • Section RD 50(3) heading: replaced (with effect on 1 April 2024), on , by section 6(1) (and see section 6(2) for application) of the Taxation (Budget Measures) Act 2024 (2024 No 19).
                            • Section RD 50(3): replaced (with effect on 1 April 2024), on , by section 6(1) (and see section 6(2) for application) of the Taxation (Budget Measures) Act 2024 (2024 No 19).
                            • Section RD 50(3B) heading: inserted (with effect on 1 April 2024), on , by section 6(1) (and see section 6(2) for application) of the Taxation (Budget Measures) Act 2024 (2024 No 19).
                            • Section RD 50(3B): inserted (with effect on 1 April 2024), on , by section 6(1) (and see section 6(2) for application) of the Taxation (Budget Measures) Act 2024 (2024 No 19).
                            • Section RD 50(3C) heading: inserted (with effect on 1 April 2024), on , by section 6(1) (and see section 6(2) for application) of the Taxation (Budget Measures) Act 2024 (2024 No 19).
                            • Section RD 50(3C): inserted (with effect on 1 April 2024), on , by section 6(1) (and see section 6(2) for application) of the Taxation (Budget Measures) Act 2024 (2024 No 19).
                            • Section RD 50(4): amended, on , by section 7(1) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
                            • Section RD 50(5) heading: replaced (with effect on 1 April 2021), on , by section 155(1) (and see section 155(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section RD 50(5): replaced (with effect on 1 April 2021), on , by section 155(1) (and see section 155(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section RD 50(6) heading: inserted (with effect on 1 April 2021), on , by section 155(1) (and see section 155(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section RD 50(6): inserted (with effect on 1 April 2021), on , by section 155(1) (and see section 155(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).