FBTnews - 2006
Issue 15 June 2006
In this issue:
- General exemption thresholds for goods and services
- FBT taxable value calculation sheet - quarterly (IR427)
- Return and payment due date
- FBT prescribed interest rate for loans
- Legislative changes
Welcome to FBTnews
In this issue we look at how to calculate the new general exemptions for goods and services provided to employees as they apply to your quarterly returns, changes to the taxable value calculation sheet and the new FBT prescribed interest rate.
If you have an FBT topic you'd like to see in the newsletter you can write to the Editor, FBTnews, PO Box 2198, Wellington or email us at fbt.news@ird.govt.nz and we'll aim to cover the topic in a future edition.
General exemption thresholds for goods and services
The general exemption thresholds applying to goods and services provided to employees have increased from 1 April 2006.
Along with these increases, the method for calculating the employer exemption has also changed. Before 1 April 2006, the employer exemption was calculated per quarter. From the quarter commencing 1 April 2006 you are now required to base this calculation on the current quarter and the previous three quarters.
| New employer exemption threshold from 1 April 2006 |
Previous employer exemption threshold |
New employee exemption threshold from 1 April 2006 |
Previous employee exemption threshold |
|---|---|---|---|
| $15,000 for the current and 3 previous quarters |
$450 per quarter | $200 per quarter | $75 per quarter |
The following examples show how the new employer and employee exemption thresholds work.
Example one
Below is Agnes Baby Ltd's FBT calculation for free (gifts and prizes), subsidised, or discounted goods and services given in the quarter ending 30 June 2006.
 |
| Follow this link to view the full sized version of Example one - in a separate page > |
Agnes Baby Ltd sales for the year (ended 31 March) exceeded shareholders' expectations. In April the owners gave all employees a $200 gift hamper to acknowledge the extra effort they had made. As the gift hampers didn't exceed the new employee exemption ($200 per employee) and because Agnes Baby Ltd has not provided total benefits in this quarter and the previous three quarters of more than $15,000, they don't have to pay FBT on the gift hampers given to employees in the quarter ended 30 June 2006.
| Note | |
|---|---|
| In the next quarterly return for the period ending 30 September 2006 Agnes Baby Ltd has a maximum of $550 worth of employer exemption available (the three quarters prior to 30 September 2006 total $14,450). If Agnes Baby Ltd provides more than $550 of free, subsidised, or discounted goods and services in the September quarter the total value of benefits will be liable for FBT. | |
Example two
Calculation for Kim's Kits Ltd for the quarter ending 31 March 2007 - the new thresholds apply for each quarter.
 |
| Follow this link to view the full sized version of Example two - in a separate page > |
As the value of all benefits has exceeded the employer threshold for the current and three previous quarters the total value of all benefits provided in the current quarter (March 2007) is liable for FBT.
| Note | |
|---|---|
| In the quarter ending June 2007 Kim's Kits Ltd has a maximum of $3,300 worth of employer exemption threshold available. If this amount is exceeded the total value of all benefits provided would be liable for FBT. | |
FBT taxable value calculation sheet - quarterly (IR427)
We've adjusted this calculation sheet to include additional columns and calculations, to incorporate the recent changes to the fringe benefit tax rules. We've listed the changes below for those of you who use the taxable value calculation sheet to calculate the value of benefits you provide to employees.
Page 1 Motor vehicles - addition of a column to show the tax book value of the vehicle. Notes explain how to calculate the value of the benefit for both the cost price and tax book value options.
Page 2 Free subsidised or discounted goods and services - exemption notes have been updated to explain how to work out if you qualify for the employer exemption for free, subsidised or discounted goods and services for the quarter.
The new $15,000 exemption is calculated on the current quarter and the three preceding quarters' benefits, so we've provided a calculation panel to help you to work out if you qualify:
- You'll need to transfer the amounts from Box 1 of your three previous quarterly calculation sheets into Boxes 3, 4 and 5.
- If the total value of Box 6 exceeds $15,000, FBT is payable on the total benefits provided in the current quarter.
- If the total value does not exceed $15,000 you can apply the employee exemption of $200 if the individual employee's total benefit does not exceed $200.
Subsidised transport - has moved from page 2 to page 3.
Page 3 Low-interest loans - includes extra columns to calculate the value of low-interest loans to employees using the market rate of interest. This option is only available to banking and financial institutions. All other employers must continue to use the prescribed rate of interest.
Contributions to funds, insurance and superannuation schemes - has moved from page 3 to page 4.
Return and payment due date
Your Fringe benefit tax quarterly return (IR420) for the period 1 April 2006 to 30 June 2006 is due on 20 July 2006.
FBT prescribed interest rate for loans
For the quarter beginning 1 April 2006 the prescribed rate used to calculate fringe benefit tax on low-interest employment-related loans is 9.55%. This is an increase from the previous quarter rate of 9.01%.
Legislative changes
For more information and examples of the fringe benefit tax changes go to
Legislative changes relating to fringe benefit tax.
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Date published: 04 Sep 2006
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