There are 4 different options when calculating fringe benefit tax (FBT) rates:
- Single rate
- Short form alternate rate
- Full alternate rate
- Pooled alternate rate.
The rate you can choose depends on whether:
- the benefit must be attributed to a particular employee, and
- you want to calculate FBT every quarter or only once a year.
You need to know your filing frequency so you can choose the available rate that best suits your business.
Filing frequency for fringe benefit tax
Rates for quarterly filers
If you are a quarterly filer, in quarters 1 to 3 you can use either the:
- single rate 63.93%
- alternate rate 49.25%.
In quarter 4, if:
- the alternate rate was used in any of the first 3 quarters, you must use the alternate rate calculation in the fourth quarter.
- only the single rate was used, you can use either the single rate or complete the alternate rate calculation.
Rates for annual or income year filers
Annual or income year filers can use either the:
- Single rate 63.93%
- Alternate rate calculation
Alternate rate calculation
There are 3 alternate rate calculation options, the full alternate rate, short form alternate rate and pooled alternate rate.
Full alternate rate
A separate calculation must be done for each employee who receives an attributed fringe benefit.
Non-attributed benefits are pooled and a flat rate is applied:
- For shareholder employees 63.93%
- For all other employees 49.25%
Short form alternate rate
- For attributed benefits 63.93%
- For non-attributed benefits to shareholder employees 63.93%
- For non-attributed benefits to all other employees 49.25%
Pooled alternate rate
The pooled alternate rate applies from 1 April 2021. You can use it to file your income year or annual return, or your return for quarter 4 of the 2021 – 2022 tax year.
You might choose this option if you mostly provide attributed benefits to employees who earn within the safe harbour thresholds (up to $160,000 in gross equivalent pay and up to $13,400 each in attributed benefits for the year).
- for employees who earn within the "safe harbour" thresholds of up to $160,000 in gross equivalent pay and up to $13,400 each in attributed benefits for the year 49.25%.
- for employees earning above either of the "safe harbour" thresholds 63.93%, unless
- you know that the employee has received less than $129,681 in net pay plus attributed benefits (all-inclusive pay) for the year, then you can choose to use 49.25%.
If attributed benefits are taxed at 49.25% for some employees and 63.93% for others, two pools may be needed.
- when one or more recipients are major shareholders 63.93%,
- otherwise 49.25%.
Changing FBT rates
- If you file quarterly you can change the rate options during the year.
- If you file annually you can choose any of the 3 rate options. You can change rate options each year.
- If you use the full or short form alternate rate option in any of the first 3 quarters, you must use the full or short form alternate rate option in the fourth quarter.
To find out more about FBT rates refer to our Fringe benefit tax guide - IR409.