As an employer, there are 3 situations where you will need to pay fringe benefit tax (FBT) on goods and services if you:
- buy goods or services and provide these to employees for less than the GST inclusive price you paid.
- sell goods you manufactured to employees at less than the lowest GST inclusive price you sell identical goods to the public, either wholesale or retail.
- provide any goods or services to employees at less than the normal GST inclusive price you sell to the public.
You may pay for an employee's home telephone, fax, internet connection, cell phone or pager. You will need to pay FBT on their private use if:
- the account is in your name
- you pay the whole account.
You may also pay some or all of an account that is in the employee's name. In this case the amount you pay is added to the employee's gross wages and PAYE is deducted.
If your business supplies transport to the public, such as passenger services by air, road, rail or sea, you need to pay FBT if an employee pays for less than 25% of the highest public fare. This also applies if the transport is provided by a company that is in the same group of companies as the employer and the group company is in the business of public transport.
Goods and services provided to shareholder employees
If you provide goods or services to shareholder employees these will generally be treated as fringe benefits.
You can choose to treat the goods or services as dividends. To do this you need to let us know in writing before the due date for the FBT return covering the period you provided the benefit in.
The taxable value of free, subsidised or discounted goods and services
The taxable value of goods you purchase is the GST inclusive price.
The taxable value of goods you manufacture is the normal GST inclusive market price.
The taxable value of services you provide is the normal GST inclusive market price, less any employee contribution you do not reimburse.
The taxable value of subsidised transport you provide is the difference between 25% of the highest public fare and the amount the employee pays.