You may need to pay fringe benefit tax (FBT) on subsidised transport that you provide your employees, or that you arrange for someone else to provide them.
Subsidised transport includes air, road, rail and sea passenger services that you provide your employees.
Who needs to pay FBT
You need to pay FBT on subsidised transport if either of the following applies.
- You are in the business of supplying transport to the public.
- You are a member of a group of companies in the business of supplying transport to the public.
FBT also applies if you have arranged for someone else to provide subsidised transport to your employees, and they are in the business of supplying transport to the public.
You must pay FBT on the full value of the benefits provided, even if the entitlement is not used.
Read about transport options that are exempt from fringe benefit tax.
Exemptions for unclassified benefits
Taxable value of benefits
The value of the benefit you provide to your employees is 25% of the highest fare charged to the public for the same service.
If someone else provides subsidised transport, the value of the benefit is the highest of:
- 25% of the highest fare you charge the public for the same service
- 25% of the highest fare the other person charges the public for the same service (if they are in the same group of companies as you)
- the amount you pay for the benefit provided.
Attributing benefits to individual employees
Generally, you need to attribute the subsidised transport benefit to the employee who receives it if the yearly amount of the benefit is at least $1,000 for that employee. In some cases you can pool the benefits and tax them all together. Read more about when you can do this.
Attributing fringe benefits to individual employees
More information
Go to Part 4 - Subsidised transport in the Fringe benefit tax guide – IR409.