Fringe Benefits Tax in New Zealand is imposed on almost every fringe benefit provided by an employer to his employees. Fringe benefits provided by someone, other than an employer are also subject to Fringe Benefits Tax.
The manner of dealing with fringe benefit tax varies according to the taxing system of the country. Under normal conditions, the Fringe Benefit Tax is provided by the employer, but in certain cases, the employees need to pay this tax.
Fringe benefits
Fringe benefit is a kind of non-wage compensation, provided to the employees in addition to their salaries or wages. In most of the countries, almost all kinds of employee benefits are taxable in nature.
Fringe Benefit Taxing Authority in New Zealand
The Fringe Benefit Tax (FBT) needs to be paid to the Inland Revenue Department (IRD) in New Zealand. The amount of FBT is ascertained on the basis of the value of the benefit provided to the employee or associate. The law regarding imposition of Fringe Benefit Tax has been incorporated in Section C of the Income Tax Act 2004.
Categories of Fringe Benefits in New Zealand
Some of the major categories of Fringe Benefits in New Zealand include low-interest loans, motor vehicles, subsidized goods and services, insurance and superannuation plans.
Methods of ascertaining Fringe Benefits Tax in New Zealand
The Fringe Benefit Tax rate in New Zealand is calculated by three efficient methods. These are multi-rate, flat rate and short form multi-rate. Among all these methods, the most acceptable method is the Flat Rate method.
Benefits that are not subject to Fringe Benefit Tax
The benefits that are not subject to Fringe Benefit Tax include
- Free board and lodging
- Cash Earnings like salary and wages, bonus, interest, dividends and withholding payments
- Entertainment of specific category
Leading countries that impose Fringe Benefit Tax
Some of the leading countries that impose Fringe Benefit Tax include United Kingdom, United States, Australia, New Zealand, Japan, India and Canada.