Fringe benefit tax and income tax return filing
If you’re a close company (5 or less people hold more than 50% of the voting interests or market value interests of the company) you can file an income year fringe benefit tax (FBT) return and income tax return at the same time if:
- your gross PAYE and employer superannuation contribution tax (ESCT) for the previous year were $1,000,000 or less
- the only fringe benefit you provided was up to two motor vehicles for private use by shareholder employees, or
- you were not an employer in the previous year.
Close companies can opt out of the FBT rules for motor vehicles if they:
- have only 1 or 2 motor vehicles available for private use by their shareholder employees, and
- do not provide any other fringe benefits.
If you choose not to use the FBT rules you'll have to:
- elect to opt out of the FBT rules
- apply the rules for vehicle expenditure in your income tax return, and
- use the rules for determining motor vehicle expenditure to make an adjustment for private use.
You can make an election by writing a note that states the company is opting out of the FBT rules, and including this with your income return covering the year the motor vehicle is:
- acquired, or
- first used for business use.
The election applies to motor vehicle arrangements between close companies and shareholder-employees until the company:
- stops using the motor vehicle for business use, or
- disposes of the motor vehicle.
Adjustments for private use may also need to be made for GST. Find out more in our GST guide (IR375).