There are 3 different fringe benefit tax (FBT) rates. You should choose the one that best suits your business. The rate you can choose depends on whether the benefit must be attributed to a particular employee.
Attributed and non-attributed benefits
Attributed benefits are fringe benefits that only one employee uses, so they are assigned to that person.
Non-attributed benefits are not assigned to an individual employee, so are shared. If you provide low-interest loans or motor vehicles for private use they must be attributed to the employee you provided them to.
In the case of employer contributions to funds, if you provide $1,000 or less contribution per employee each year, you can account for these as non-attributed benefits.
You must either account for all contributions as attributed benefits or account for them all as non-attributed benefits. The same $1,000 limit per employee per year applies if you provide subsidised transport to your employees.
The single rate is 49.25%. It is applied to all fringe benefits you provide.
If any of your employees earn less than $70,000 per year you will pay more FBT than if you use an alternate rate.
Short form alternate rate
The short form alternate rate is 49.25% for attributed benefits. It is 49.25% for non-attributed benefits provided to major shareholder employees, and 42.86% for other non-attributed benefits. This rate can be a good option if you:
- have employees earning less than $70,000
- provide non-attributed benefits.
Full alternate rate
The full alternate rate is between 11.73% and 49.25%. The rate will be higher if the employee earns more or if the fringe benefits they received are worth more.
This rate is only applied to attributed benefits. Using it can reduce the FBT you need to pay, but you must do a separate calculation for each employee.
Our FBT calculator will do this calculation for you.
Changing FBT rates
If you file annually you can choose any of the 3 rates. You can change rates each year.
If you file quarterly you can change rates during the year.
If you use the full or short form alternate rate in any of the first 3 quarters, you must use the full or short form alternate rate in the fourth quarter.
To find out more about FBT rates refer to our Fringe benefit tax guide - IR409.