FBTnews - 2007

Issue 21 December 2007

In this issue:

• Completing your quarterly return for December 2007
• Due date for Fringe benefit tax quarterly return (IR420) for period ending 31 December 2007
• Entertainment expenses
• FBT on superannuation schemes
• FBT on motor vehicles - are you paying too much?
• FBT prescribed rate on low-interest loans

Completing your quarterly return for December 2007

For the return period 1 October 2007 to 31 December 2007 please make sure you complete these sections of the Fringe benefit tax quarterly return (IR420).

Due date for Fringe benefit tax quarterly return (IR 420) for period ending 31 December 2007

For this period, the return and payment due date of 20 January 2008 is a Sunday so we'll accept all returns and payments made on the next working day as being received on time. As Wellington Anniversary Day falls on Monday 21 January, returns and payments made by employers in the Wellington region on Tuesday 22 January 2008 will also be treated as being received on time.

Entertainment expenses

Over the holiday season you may give gifts or have staff functions for your clients and employees. Here's an outline of what are considered entertainment expenses and how we treat these for FBT purposes. Any benefit employees consume or enjoy at their discretion and outside their employment duties is subject to FBT, eg a restaurant dinner voucher awarded to an employee as part of an incentive scheme. The meal can be enjoyed at the employee's discretion and not in the course of their employment duties.

General exemption

However, there's a general exemption from paying FBT which applies to free (gifts and prizes) and subsidised or discounted goods or services. Entertainment benefits also fall under the general exemption category.

If you pay FBT on a quarterly basis and provide free (gifts or prizes) or subsidised or discounted goods and services to your employees, the general exemption is $200 for each employee each quarter, with a maximum employer exemption of $15,000 for all employees for the current quarter and the three preceding quarters.

For annual and income year filers, the exemption is $800 for each employee, with a maximum employer exemption for all employees of $15,000 each year.

If the value of the benefits provided exceeds these thresholds, FBT is payable on the full value of the benefits provided. The exemption isn't deducted first.

For example, if you want to reward your employees for their efforts throughout the year with a Christmas gift, and you file quarterly FBT returns, no FBT is payable in this quarter as long as the value of the benefits for each employee:

• doesn't go over $200 for the quarter, and
• the total value of benefits provided in this quarter and the three preceding quarters doesn't exceed $15,000.

If you file FBT returns on an annual or income year basis, you won't have to pay FBT, provided:

• the value of the benefits each employee receives doesn't exceed $800, and
• the total value of benefits all employees receive doesn't exceed $15,000.

Christmas functions

Generally, if you provide Christmas functions for your employees at a set time and hold them either at your business premises or somewhere else, eg a restaurant, these are included as entertainment expenses and the food and drink is 50% deductible for income tax and not liable for FBT. Other incidental expenses such as employing waiting staff, hiring crockery, glassware or providing music will also be 50% deductible.

Expenses incurred in entertaining clients will usually be 50% deductible, eg entertaining clients in a corporate box at a cricket match.

If the entertainment is subject to FBT it will generally be fully deductible for income tax. Check out our guide Entertainment expenses (IR268) for more information. You can read this online or order a copy by calling INFOexpress on 0800 257 773.

FBT on superannuation schemes

If you make contributions to any employees' superannuation schemes you'll need to pay FBT on these contributions unless the superannuation scheme is:

• a KiwiSaver scheme, or
• a complying superannuation scheme, or
• you've paid specified superannuation contribution withholding tax (SSCWT) on these contributions. If you're not sure if SSCWT applies to your superannuation scheme, call us on 0800 377 772.

If you make contributions for employees to any:

• sick, accident or death benefit fund
• funeral trust, or
• insurance fund of a friendly society, life, pension or personal accident or sickness policies you'll need to pay FBT on these contributions.

FBT on motor vehicles - are you paying too much?

If your employees or shareholder-employees are required to store a vehicle at their home and the vehicle isn't to be used for any purpose other than travel from work and home (except incidental travel) you don't need to pay FBT on those vehicles if all four of the following requirements are met:

1. The main design of the vehicle isn't to carry passengers.
2. The company name, logo, acronym or other business identification is permanently and prominently displayed on the exterior of the vehicle.
3. You've notified them in writing that the only private use the vehicle is available for is travel between home and work and any travel that's incidental to business travel (eg passing by the bank on the way home from work).
4. You carry out checks at least quarterly on each vehicle you claim the exemption for, to ensure that the restriction is being followed.

If the vehicle meets all the above requirements and you allow your employees or shareholder-employees to use the vehicle on certain days (eg the weekend or public holidays) you only need to pay FBT for those days in each quarter.

For more information about FBT on motor vehicles please see our Fringe benefit guide (IR409) or you can order a copy by calling INFOexpress on 0800 257 773.

FBT prescribed rate on low-interest loans

The rate used to calculate fringe benefit tax on low interest, employment-related loans for the quarter beginning 1 October 2007 is 10.37%. This is an increase from the previous rate of 9.79%.

Alan Quinn
Manager
Customer Insight

Wishing you a safe and happy holiday season

Download ›

PDF | 205 KB | 2 pages

Download Acrobat Reader to view PDF files

Report an accessibility problem for this page

Other issues this year

Issue 20 September 2007
Issue 19 June 2007
Issue 18 March 2007

Date published: 27 Nov 2007

Back to top