About the single and alternate rates for fringe benefit tax (FBT), the alternate rate calculation options, and when to use them.
Single rate 63.93%
You can use the single rate in quarterly, income year and annual returns.
If you use the single rate, FBT is calculated using 63.93% on all benefits you provide to employees, regardless of how much they will earn for the tax or income year.
If you're filing quarterly returns, you can use the single rate for all 4 quarters.
No other calculations are required if you use the single rate for all 4 quarters.
Alternate rate 49.25%
You can use the alternate rate in quarterly returns, but only in quarters 1 to 3.
You may want to use this option if the total of your employee’s income and fringe benefits is less than $180,000 for the tax year.
You must use the single rate of 63.93% if you're not using the alternate rate.
Quarter 4 return options
Your options depend on whether you used the single or alternate rate in quarters 1 to 3.
Single rate used in any quarters 1 to 3
If you use the single rate in quarters 1 to 3 for employees earning less than $180,000, you may want to complete quarter 4 using 1 of the 3 alternate rate calculation options. This is because FBT may be overpaid for these employees using 63.93% rate in all 4 quarters.
Alternate rate used in any quarters 1 to 3
If you used the alternate rate of 49.25% in any of the 3 quarters, you must use 1 of the 3 alternate rate calculation options in quarter 4 to calculate the FBT payable:
- full alternate rate
- short form alternate rate
- pooled alternate rate.
Changing the rate for quarterly returns
If you decide to use the alternate rate option in a quarter, you cannot go back and change the option to the single rate after the return has been filed.
If you’ve filed all 4 quarters using the single rate, you can apply to change the option for quarter 4 to complete the alternate rate calculation. You must apply to us with the necessary information within 2 months of your quarter 4 assessment.
Income year and annual returns
If you file income year or annual returns, you have 2 options.
- You can pay FBT at the single rate option on the taxable value of the benefits provided.
- You can complete the full alternate, short form or pooled alternate rate calculation option.
Alternate rate calculation options for quarter 4, income year and annual returns
Here’s what to do if you choose the full alternate, short form or pooled alternate rate calculation options.
Full alternate rate – attributed benefits
You'll need to do separate calculations for each employee receiving attributed benefits.
The calculation is based on each employee's total remuneration for the tax or income year (net income plus total fringe benefits).
Full alternate rate – non-attributed benefits
You must use 2 pools if both rates apply to non-attributed benefits.
- Pool 1 - 63.93% for benefits provided to major shareholder-employees
- Pool 2 - 49.25% for all other employees.
If a major shareholder is 1 of the recipients of non-attributed benefits that cannot be assigned, all benefits in the benefit type are taxed at 63.93%.
Short form alternate rate – attributed benefits
Apply 63.93% to all attributed benefits for all employees regardless of how much they earn or receive in attributed benefits for the tax year or income year.
Short form alternate rate – non-attributed benefits
These are treated the same as the full alternate rate.
Pooled alternate rate – attributed benefits
Attributed benefits have either 49.25% or 63.93% applied, depending on the employee's earnings and the value of benefits attributed to them.
If the 49.25% rate applies to some employees and 63.93% rate for others, you must use 2 pools.
Pool 1 - 49.25%
- employees receiving income of $160,000 or less and attributed benefits are $13,400 or less annually
- employees receiving total remuneration (net income plus fringe benefits) is less than $129,681 for 2025 year or $130,724 for 2026 year.
Pool 2 - 63.93% - all other employees not included in pool 1.
Pooled alternate rate – non-attributed benefits
These are treated the same as the full alternate rate.
When to attribute fringe benefits – benefit types and thresholds
Each type of fringe benefit has a threshold for when to attribute fringe benefits to individual employees.
Attributing fringe benefits to individual employees
More information
Go to Part 7 – How to complete alternate rate calculations in myIR in the Fringe benefit tax guide – IR409.