Fringe benefit tax (FBT): Fringe benefit tax in relation to GST and income tax
Goods and services tax issues
Does the taxable value include GST?
Calculate fringe benefit tax on the GST-inclusive value of any fringe benefits. This requirement will not affect all fringe benefits.
Fringe benefits that are GST-exempt supplies will not include any GST component, so their taxable value is GST-exclusive. Examples are low-interest loans, overseas travel and life insurance.
How do you calculate the GST on fringe benefits?
To calculate the GST on fringe benefits, follow these steps.
- Take the total taxable value of all fringe benefits from Box 3 of your FBT return.
- Subtract the value of any benefits that are exempt or zero-rated for GST (for example, low-interest loans, overseas travel, life insurance). The result is the amount of fringe benefits liable for GST.
- Divide the result by nine and put this adjustment figure in:
- Box 7 of the quarterly Fringe benefit tax quarterly return (IR420) for quarterly filers
- Box 6 of the Fringe benefit tax annual return (IR422) and Fringe benefit tax income year return (IR421) for annual and income year filers.
Example
Details of taxable benefits for FBT quarter ended 30 June 2004:
| Motor vehicles | $ 2,605 |
| Low-interest loans | $ 425 |
| Magazine and newspaper subscriptions | $ 52 |
| Subsidy on employee's honeymoon trip to Fiji | $ 600 |
| ______ | |
| $ 3,682 | |
| The benefits liable for GST are: | |
| Motor vehicles | $ 2,605 |
| Magazine and newspaper subscriptions | $ 52 |
| ______ | |
| $ 2,657 |
The low interest loan and subsidy for the Fiji honeymoon are not included because loans and international travel are exempt and zero-rated supplies respectively.
The GST adjustment to include in Box 7 of the FBT return for the quarter ended 30 June 2004 is $295.22 ($2,657 divide by 9). The adjustment amount is payable at the same time as the underlying FBT for the June quarter (i.e. 20 July 2004).
Date published: 14 Oct 2004
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