FBTnews - 2003
Issue 3 June 2003
In this issue:
- Welcome to FBTnews
- Filing your FBT return online with eFBT
- FBT tax rate options in quarters 1, 2 and 3
- Correction to the Fringe benefit tax return guide (IR 425)
- Due dates for filing and paying your first quarter return
- A reminder about penalties and interest...
- What do do if you can't pay
- FBT prescribed interest rate for loans
Welcome to FBTnews
We welcome requests for FBT topics you'd like to see in the newsletter and we'll aim to cover these in future editions. You can write to:
The Editor,
FBTnews,
PO Box 2198,
Wellington
or email us at fbt.news@ird.govt.nz
FBTnews is published quarterly. You can view it on our website or subscribe to it electronically.
If you have an email address but no internet access, email us on fbt.news@ird.govt.nz and we will subscribe for you.
Filing your FBT returns online with eFBT
The eFBT return is a new service on our website that lets you file your FBT returns electronically instead of filing a paper return. The eFBT return is slightly different to the paper return. Working online has enabled us to include some enhancements such as working out the calculations for you, where possible.
The eFBT service is entirely optional and, although you can continue to file your paper return if you prefer, we encourage you to try it out and see how the service can benefit you.
For example:
- the eFBT return arrives at Inland Revenue the same day as you send it
- you can save on postage costs if you pay electronically
- the calculations are checked before you file.
How to file with eFBT
Go to our website and follow the link from "Online services, file a tax return". Keep the paper return we've sent you handy because you'll need to key in the unique 14-digit number printed at the top.
Security
The eFBT return is on the secure part of Inland Revenue's website, so your browser needs to support 128-bit encryption and recognise Inland Revenue's website as a trusted site.
For more information, see our Online services page.
Any problems?
For questions about filing an eFBT return you can call us on 0800 377 772 between 8 am and 8 pm weekdays and 9 am and 1 pm Saturdays.
FBT tax rate options in quarters 1, 2 and 3
The fringe benefit tax rate options available in quarters 1, 2 and 3 are either 49% or 64%. Please note the short form multi-rate of 63.93% should not be used in any quarter other than the fourth quarter.
Correction to the Fringe benefit tax return guide (IR425)
We've noticed an error in the 2003 fringe benefit tax return guide. This error affects quarterly FBT filers who used the multi-rate calculation.
If you followed the instructions on completing the fourth quarter multi-rate calculation sheet in the return guide and the benefits you provide are liable for GST, you will have underpaid the total payable. We apologise for any inconvenience this may have caused.
This article explains how to calculate the correct amount and make an adjustment for this in your next FBT return.
On page 21 of the guide it states that when calculating the FBT to pay in the fourth quarter, you will need to total the amount of FBT that was assessed in the previous three quarters. Although this in itself is correct, the guide then goes on to show that the figures for the previous three quarters should be taken from Box 8 of each of those returns to arrive at the assessed amount. In fact, the values should be taken from Box 6, not Box 8.
The result of taking the values from Box 8 instead of Box 6 means you have deducted the total payable, including any GST payable in the first three quarters from the total fringe benefit tax payable for the year, instead of deducting the FBT payable in the first three quarters (from Box 6). This means that the liability for the square-up in the fourth quarter is incorrectly reduced by the GST payable in the first three quarters.
If you have filed your FBT return for the quarter ended 31 March 2003, and you have used the values from Box 8 of your returns when calculating the fringe benefit tax assessed in quarters 1 to 3 on your multi-rate calculation sheet, your FBT would have been underpaid by the value of the GST payable.
If you have used the multi-rate calculation sheet instructions as stated on page 21 of the return guide for the fourth quarter, please recheck your calculations. If, after checking your calculations, you find you have used the values from Box 8, you will need to recalculate using the values from Box 6 instead of Box 8. The underpayment should be included in Box 7 of your next FBT return, along with any GST payable in that quarter.
Due date for filing and paying your first quarter return
20 July 2003 is the standard due date for the first quarter return for the 2004 year. As 20 July falls on a Sunday, your FBT return and payment is now due by 21 July 2003.
A reminder about penalties and interest...
If you pay your FBT late, an initial 1% late payment penalty will be charged on the day after due date. A further 4% penalty will be charged if there is still an amount of unpaid tax (including penalties) at the end of the 7th day from the due date.
Every month the amount owing remains unpaid a further 1% incremental penalty will be added.
Interest is calculated daily on the amount outstanding, including penalties. The interest rate is currently 11.93%.
What to do if you can't pay
If you are unable to pay the full amount by the due date, please contact us as soon as possible. We will look at your current situation, your payment history and your ability to meet future tax obligations. This will help us to determine the best option for dealing with the amount due.
The first option to consider is whether you have the ability to pay in full. Your outstanding debt will incur daily interest as well as late payment penalties so there are advantages to you in raising money from other sources to pay the debt if you can.
If you are unable to pay in full, other options are:
- an instalment arrangement where you repay the amount over time
- a write-off of the amount due if we determine that full payment would cause you serious hardship
- a combination of an instalment arrangement and a write-off of any amount that would cause you serious hardship if it was paid.
If an instalment arrangement is the best option we can negotiate this with you over the phone in most cases. The incremental penalties that normally accrue every month that the overdue tax remains unpaid are not charged if you contact us to negotiate how the debt will be settled. This suspension of incremental penalties remains right through until you've either repaid the amount by agreed instalments, or until any amount is written off, if we determine that full payment would cause you serious hardship. Daily interest however, continues to be charged.
Contacting us and entering into an arrangement before the due date for payment will further reduce any late payment penalties charged.
Bryre Patchell
National Manager, BusinessDirect
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Date published: 23 Nov 2004
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