If you provide gifts and prizes, subsidised or discounted goods and services, fringe benefit tax (FBT) is not payable if general employee and maximum employer exemption requirements are met.
General employee exemption
You can provide an employee with up to $300 of gifts and prizes, subsidised or discounted goods and services each quarter and not pay FBT. As soon as you go over this limit the full value of the benefit is subject to FBT.
Employers who file annual or income year returns have a yearly exemption of $1,200 for each employee.
Maximum employer exemption
The maximum exemption you can claim is $22,500 each year.
If you pay FBT quarterly and the value of the benefits you provide exceeds $22,500 in total for the current and last 3 quarters, you must pay FBT on the full value of the benefits for the current quarter.
Employers who exceed the maximum exemption and pay FBT annually or for an income year, must pay FBT on the full value of benefits over $22,500. If the period covered by the return is less than a normal income year, you will need to make an adjustment for each employee.
Common items that are exempt from FBT include:
- distinctive work clothing that identifies your company
- car parks you lease or which are on your property
- frequent flyer and membership reward schemes unless you have an arrangement with the scheme provider that benefits employees
- certain public transport fares that are subsidised by an employer for the main purpose of their employee travelling between home and work e.g. bus, train, ferry, cable car.
- transport fares partly funded by the Total Mobility Scheme
- employer provided bicycles, electric bicycles, scooters, electric scooters and other low-powered vehicles that Waka Kotahi declares are mobility devices or not motor vehicles. They must be provided for the main purpose of the employee travelling between work and home. This also applies to employers helping pay for certain vehicle share services for any of these modes of transport.