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Income Tax Act 2007

General collection rules - Employment-related taxes - Options for payment of FBT

RD 59: Alternate rate option

You could also call this:

“Choose how to pay fringe benefit tax throughout the year”

If you’re an employer, you can choose to pay your fringe benefit tax (FBT) using the alternate rate option. This means you can pay FBT in different ways throughout the year.

For the first three quarters of the tax year, you have two choices:

You can pay 49.25% of the taxable value of a fringe benefit.
Or, you can pay 63.93% of the taxable value of a fringe benefit.

You can use either of these rates for any of the first three quarters. You don’t have to use the same rate each time.

In the last quarter of the tax year, you need to do some maths. You’ll calculate the total FBT you owe for each employee for the whole year. You’ll use sections RD 50 and RD 53 to do this. Then, you’ll subtract the FBT you’ve already paid in the first three quarters.

Once you’ve chosen to use the alternate rate option and filed your return, you can’t change your mind. You have to stick with this option for that tax year.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520127.

Topics:

Money and consumer rights > Taxes

RD 58: Single rate option, or

“Option to pay fringe benefit tax at a fixed rate each quarter”

RD 60: Close company option, or

“Option for small companies to pay fringe benefit tax annually”

Part R General collection rules
Employment-related taxes: Options for payment of FBT

RD 59Alternate rate option

This section applies when an employer chooses to pay their FBT liability under the alternate rate option.
The employer may pay FBT for any or all of the first 3 quarters of a tax year at 49.25% of the taxable value of a fringe benefit.
The employer must pay FBT at the rate of 63.93% of the taxable value of a fringe benefit for any of the first 3 quarters of a tax year for which they do not pay at the rate of 49.25% under subsection (2).
For the final quarter of the tax year, the employer must calculate the total FBT payable for each employee under sections RD 50 and RD 53 for the tax year and subtract the amount of FBT payable for the previous 3 quarters of the tax year.
The decision to use the alternate rate option cannot be changed after the return is filed.

Compare

2004 No 35 ss ND 1(2)(a), ND 2(1)–(4), ND 10(1)

Notes

Section RD 59(2): amended, on 1 April 2021, by section 11(1) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 59(2): amended, on 1 April 2011 (applying for the 2011–12 income year and later income years), by section 68(2)(a) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section RD 59(3): substituted, on 1 April 2011 (applying for the 2011–12 income year and later income years), by section 68(2)(b) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section RD 59(3): amended, on 1 April 2021, by section 11(2)(a) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 59(3): amended, on 1 April 2021, by section 11(2)(b) (and see section 3 for application) of the Taxation (Income Tax Rate and Other Amendments) Act 2020 (2020 No 65).
Section RD 59(4): amended, on 2 November 2012, by section 138 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).