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Income Tax Act 2007

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

RD 63: When employer stops employing staff

You could also call this:

“ Rules for paying tax on employee benefits when you stop employing staff ”

If you’re an employer and you stop employing staff without planning to replace them, this part of the law applies to you. However, it doesn’t apply if you still give fringe benefits to someone who used to work for you.

When you stop employing staff, you need to pay FBT (Fringe Benefit Tax) for the quarter of the tax year when you stopped employing people. You should treat this quarter as if it’s the last quarter of the tax year.

You have two choices for how to pay the FBT:

  1. You can pay it using the normal way described in section RD 59.

  2. Or you can choose to use the single rate option. If you pick this option, you’ll calculate the FBT from the start of the tax year up to the day you stopped employing staff. You’ll also need to think about any FBT you’ve already paid for your employees.

Remember, these rules are about paying taxes on the extra benefits you give your employees, like company cars or discounted goods. They help make sure you pay the right amount of tax when you stop having employees.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1520135.

Topics:
Money and consumer rights > Taxes
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Part R General collection rules
Employment-related taxes: Options for payment of FBT

RD 63When employer stops employing staff

  1. This section applies in a tax year to an employer who stops employing staff and does not intend to replace them. But this section does not apply to an employer who continues to provide a fringe benefit to a former employee.

  2. The employer must pay FBT under section RD 59, treating the quarter of the tax year in which the employment ended as if it were the final quarter.

  3. As an alternative to the application of sections RD 50 and RD 53, the employer may choose to pay FBT under the single rate option—

  4. making the calculation in relation to the period from the start of the tax year to the date on which the employer stops employing staff; and
    1. taking into account any earlier payments of FBT made in relation to an employee.

      Compare
      Notes
      • Section RD 63(3): amended (with effect on 1 April 2021), on , by section 158 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).