Plain language law

New Zealand law explained for everyone

 Plain Language Law homepage
Back to
RD 61: Small business option
or “Pay FBT once a year for small businesses with low employee tax or no employees”
You could also call this:

“How and when you can change your FBT payment schedule”

You can’t change your decision to pay FBT every three months if you’ve chosen the single rate or alternate rate option.

If you’ve decided to pay FBT once a year or based on your income year, but you don’t meet the rules for this anymore, you need to switch to paying every three months using either the single rate or alternate rate option. This change starts from the first day of the tax year.

You can choose to pay FBT every three months even if you’ve been paying once a year or based on your income year. If you make this change, you’ll start paying every three months from:

  • The start of the next tax year if you were paying once a year.
  • The start of your next income year if you were paying based on your income year.
  • Another date that you and the tax office agree on.

If you’re allowed to use the close company option and want to switch from paying every three months to paying based on your income year, you need to do a special calculation. This calculation covers the time from the end of your last full tax year of paying every three months to the start of your first income year under the new system.

If you change from paying based on your income year to paying every three months, and the start date doesn’t match the start of a three-month period, you need to treat the time until the next three-month period starts as if it were a full three-month period for FBT purposes.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

Next up: RD 62B: Obligations of cross-border employees when FBT liability not paid

or “Cross-border employees' tax duties for fringe benefits received in New Zealand”
Next

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

RD 62Changes in payment periods

  1. An employer’s decision to pay FBT on a quarterly basis under the single rate option or the alternate rate option cannot be changed.

  2. If an employer who has chosen for a tax year to pay FBT on an income year basis or on an annual basis no longer meets the relevant requirements of section RD 60(1) or RD 61(1), the employer must pay their FBT liability for fringe benefits provided to employees on or after the first day of the tax year under the single rate option or the alternate rate option.

  3. An employer who has chosen for a tax year to pay FBT on an income year basis or on an annual basis, may choose at any time to pay FBT on a quarterly basis.

  4. An employer who chooses to change their payment period under subsection (3) must pay their FBT liability on a quarterly basis for a fringe benefit provided from—

  5. the first day of the next tax year, if the employer previously paid on an annual basis; or
    1. the first day of the next income year of the employer, if the employer previously paid on an income year basis; or
      1. another date agreed by the employer and the Commissioner.

        1. If an employer who is eligible to use the close company option has been paying FBT on a quarterly basis, and chooses to change to payment on an income year basis, a calculation must be made under section RD 59 for the period—

        2. beginning immediately after the end of the last full tax year for which the employer pays FBT on a quarterly basis:
          1. ending immediately before the start of the first income year for which the election applies.

            1. If an employer changes their payment period from an income year to a quarter, and the day referred to in subsection (4)(b) is not the same day as the first day of a quarter, then for the purposes of the payment of FBT, the employer must treat the period between that day and the first day of the next quarter as if it were a quarter.

            Compare