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Income Tax Act 2007

Tax credits paid in cash - Adjustment of net income for family scheme

MB 7B: Family scheme income from employment benefits: employees not controlling shareholders

You could also call this:

“Income calculation for employees receiving job benefits”

This law applies to you if you’re an employee who isn’t a controlling shareholder and your employer offers you certain benefits. It affects how your family scheme income is calculated for tax purposes.

If your employer gives you a company car for personal use, and you could get more pay if you didn’t take the car, the extra pay you could have gotten is added to your family scheme income.

If your employer provides you with a short-term charge facility (like a credit card), the value of what you buy with it, including tax, is added to your family scheme income. But this only happens if the total value of what you buy in a year is more than 5% of your salary or $1,200, whichever is less.

When working out the tax on these benefits, you can use either the rate your employer uses or the highest rate listed in the tax rules.

This law helps make sure that people who get these kinds of benefits from their job are treated fairly when it comes to working out their family scheme income.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6031214.

Topics:
Money and consumer rights > Taxes
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MB 7: Family scheme income of settlor of trust, or

“How your family income is calculated when you set up a trust”

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MB 8: Family scheme income from fringe benefits: controlling shareholders, or

“How to calculate family income when you get extra perks from a company you partly own”

Part M Tax credits paid in cash
Adjustment of net income for family scheme

MB 7BFamily scheme income from employment benefits: employees not controlling shareholders

  1. This section applies for the purpose of determining the amount that represents the family scheme income of a person to whom section MB 8 does not apply for an income year when the person has an employer who makes available—

  2. a motor vehicle for the person's private use when, under the terms of the person's employment, the person would be entitled to a greater amount of employment income should the person choose, or have chosen, not to receive the benefit of the motor vehicle:
    1. a short-term charge facility as defined in section CX 25(3) (Benefits provided by charitable organisations).

      1. The person's family scheme income for the income year includes an amount equal to the total for the person and the income year of amounts, each of which is—

      2. the amount by which the employment income of the person would be greater in the absence of a benefit referred to in subsection (1)(a):
        1. the value, including fringe benefit tax, of a benefit provided to the person under a short-term charge facility referred to in subsection (1)(b), if the total value of such benefits, not including fringe benefit tax, provided in the income year is more than the lesser for the income year of—
          1. 5% of the employee's salary or wages:
            1. $1,200.

            2. In calculating under subsection (2)(b) the amount of fringe benefit tax on a benefit, the person may use—

            3. the rate of fringe benefit tax used by the person’s employer in calculating the fringe benefit tax payable on the benefit:
              1. the maximum basic rate of fringe benefit tax specified in schedule 1, part C, table 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).

                Notes
                • Section MB 7B: inserted, on , by section 76 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                • Section MB 7B(2)(b): amended (with effect on 1 April 2014), on , by section 136(a) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                • Section MB 7B(2)(b): amended (with effect on 1 April 2014), on , by section 136(b) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                • Section MB 7B(3) heading: inserted (with effect on 1 April 2014), on , by section 165 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                • Section MB 7B(3): inserted (with effect on 1 April 2014), on , by section 165 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).