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Fringe benefit tax and income tax return filing

If you’re a close 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.

Motor vehicles

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.

Opting out of FBT

You can make an election by writing a note that states the company is opting out of the FBT rules. You include 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.

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GST guide PDF 380KB Download form