FBTnews - 2007
Issue 18 March 2007
In this issue:
- 2007 Fringe benefit tax return guide (IR425)
- Shareholder-employees remuneration or attributed income unknown for period ended 31 March 2006
- Attributed and non-attributed benefits
- Completing your FBT return for the period ending 31 March 2007
- Fringe benefit tax annual return (IR422)
- Due date for filing and paying your fourth quarter or annual return
- FBT prescribed rate on low-interest loans
2007 Fringe benefit tax return guide (IR425)
The 2007 FBT return guide (IR425) we send you is designed to assist you to complete your fourth quarter or annual return for the period ended 31 March 2007. The 2007 version of this guide has been reduced in size and now fits in a business envelope without needing to be folded.
We've taken out a lot of information which had been in the guide since the multi-rate calculation process was introduced, and was duplicated throughout the guide. As a result of this smaller guide, the examples of completed multi-rate calculation sheets, FBT returns and the remuneration adjustment worksheet have also been removed. You'll find all these examples and more information about using the multi-rate option in our Fringe benefit tax guide (IR409). You can view this on our website or order a copy by calling INFOexpress on 0800 257 777.
Shareholder-employees remuneration or attributed income unknown for period ended 31 March 2006
Where you elected to use the 49% flat rate in your fourth quarter or annual return for the period ended 31 March 2006 for shareholder-employees, and you did not have all remuneration or attributed income details, you must make an adjustment using the full multi-rate calculation and include this in your return for the period ended 31 March 2007. You can use the remuneration adjustment worksheet available on our website to calculate the adjustment required.
For each shareholder-employee you'll need the following information:
- total attributed benefits provided for the period ended 31 March 2006
- last year's income
- the amount of FBT paid in last year's return.
The adjusted figure along with the amount calculated on your multi-rate calculation sheet, will give you the amount of FBT to show on your FBT return for the period ended 31 March 2007. Remember to tick "FBT to pay" or "FBT refund".
Attributed and non-attributed benefits
Attributed benefits are fringe benefits that an employee has principal use or enjoyment of during the year, for example a motor vehicle, and benefits where the annual taxable value is more than $1,000. If you use the multi-rate calculations you must attribute fringe benefits as follows:
- Full multi-rate calculation
You are required to attribute fringe benefits to the employee receiving them. FBT will then be calculated according to the employee's total remuneration package. - Short-form multi-rate calculation
All attributed benefits received by any employees are combined and FBT is calculated on the total value of attributed benefits at 63.93%.
Non-attributed benefits
The following benefits do not have to be attributed to the particular employees who receive them are:
- Subsidised transport of a taxable value of less than $1,000 per employee per year.
- Employer contributions to superannuation (where Specified Superannuation Contribution Withholding Tax (SSCWT) does not apply) and insurance funds of less than $1,000 per employee per year.
- Benefits from loans on life insurance policies.
- Benefits that it is not possible to attribute to particular employees (eg pooled vehicles).
- Benefits provide to ex-employees.
- Contributions to a sick, accident or death fund less than $1,000 per employee per year.
- Any other benefit with a taxable value of less than $2,000 per employee per year.
Note
If a benefit in a category is attributed to one employee, all benefits of that category must be attributed.
Non-attributed benefits provided to ordinary employees are taxed at a flat rate of 49%. Non-attributed benefits provided to major shareholder-employees are taxed at 64%.
Note
For quarterly filers
In this quarter you'll need to check the non-attributed benefits to ensure that the annual taxable value of the employee's benefits in a particular category is less than the thresholds for attributing fringe benefits. You'll find a list of the categories and thresholds in the 2007 FBT return guide (IR425).
Completing your FBT return for the period ending 31 March 2007
When completing your fourth quarterly (IR420) return please note that you need to complete section C not section B as you do in all other quarters. Section C tells us the FBT rate option you are using overall for the year ending 31 March 2007.
The options available:
- If you paid FBT at 64% in each of the three previous quarters you can use the 64% rate or the multi-rate in quarter four.
- If you paid FBT at 49% in any of the previous three quarters, you must complete the multi-rate calculations in the fourth quarter.
If you are filing an IR422 annual return, you have the choice of either paying FBT at 64% flat rate or applying one of the multi-rate calculations.
Fringe benefit tax annual return (IR422)
This is the return for employers (including companies) who have elected to file annual returns. The period covered by this return is from 1 April to 31 March. It is due on 31 May of the same year.
Election to file annual returns
You can only file annual returns if your gross annual tax deductions (not including earner levy) and SSCWT deductions are $100,000 or less. You can elect to file annual returns by completing the online FBT election form or you can call us on 0800 377 772. If you want to elect to file annual returns for the year ended 31 March 2008, you must make an election by 30 June 2007.
We cannot accept late elections.If your election is late, we will let you know and you will have to continue filing quarterly returns until the next financial year.
Due date for filing and paying your fourth quarter or annual return
31 May 2007 is the due date for filing and paying both the fourth quarter and annual returns for the year ended 31 March 2007.
FBT prescribed rate on low-interest loans
There's no change to the prescribed rate of interest for calculating the fringe benefit value of low-interest loans to employees. It remains at 9.55% for the quarter beginning 1 January 2007.
Alison Parks
Manager
Customer Operations
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Date published: 07 Mar 2007
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