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Fringe benefit tax Tāke mō ngā huanga ki ngā kaimahi

Understanding fringe benefit tax

Fringe benefit tax (FBT) is a tax you pay on most non-cash benefits you provide to your employees.

FBT basics

If you're an employer and you provide benefits to your employees over and above their salary or wage (fringe benefits), you may need to pay FBT.

What is FBT?

While the cash benefits you give employees (eg salary or wages) get taxed through income tax, the non-cash benefits don’t.

FBT was introduced to tax these non-cash benefits (fringe benefits).

Now, all employee benefits – both cash and non-cash – get taxed equally, no matter how they’re provided. It keeps things fair.

When to register for FBT

As an employer, you need to register for FBT when you first start giving your employees, shareholders, or other people associated with your business, a fringe benefit. You can choose to register for FBT when you complete the Employer registration form (IR334).

If you already provide fringe benefits, but aren’t registered yet you will need to register from the date you first provided a fringe benefit. You may need to file returns for earlier periods and make any outstanding payments. Give us a call and we can help get you sorted.

What to do once you’re registered

Once you’re registered for FBT you need to:

  • Find out about the rules for the fringe benefits you provide
    There are different rules and exemptions for each type of fringe benefit, including the way you work out and record their taxable value.
  • Choose a filing frequency
    There are options for filing and paying FBT quarterly, annually for the tax year, or annually for your income year. Your choice of filing frequency might be limited depending on the type of company you have and how much tax you pay each year.
  • Choose a FBT rate and use it to calculate the FBT on the fringe benefit
    FBT is a percentage of the taxable value of the fringe benefits you provide. There are three different rates you can choose from, with pros and cons to consider for each.
  • File FBT returns and pay FBT by the due date
    The easiest way to file FBT returns is online. We also mail out paper returns which you can fill in and mail back. You can claim the FBT you pay as a deduction in your income tax return.

Types of fringe benefits

There are four main types of fringe benefits. If any of these are received by your employees as a result of their employment, you may need to pay FBT:

  1. Motor vehicles available for private use
  2. Free, subsidised or discounted goods and services
  3. Low-interest loans
  4. Employer contributions to funds, insurance and superannuation schemes.

Entertainment expenses

Business-related entertainment expenses, where the benefits are enjoyed by employees, can be subject to FBT.

If it’s an entertainment expense which is only 50% deductible (because it has a significant private element), it isn’t subject to FBT. The exception is if:

  • your employee can choose when and where to enjoy the benefit, or the benefit is enjoyed outside of New Zealand, and
  • the benefit is not provided in the course of, or as a necessary consequence of, the employee’s employment duties.

Learn more about entertainment expenses and FBT in our Entertainment expenses guide (IR268).

Cash benefits

You don’t have to pay FBT if you make a cash payment to an employee. Instead, you treat the cash payment as part of the employee's salary or wage and make normal employee deductions (like PAYE).

Terms to know


An employer is anyone who pays, has paid, or will pay, salaries, wages, lump sums or schedular payments. For FBT purposes, the definition also includes:

  • all partners in a partnership that has employees
  • the manager or principal officer of an unincorporated group
  • trustees in an estate or trust
  • anyone who has control of property, such as the Official Assignee, a company liquidator or the trustee of a deceased estate.


An employee is anyone paid a salary, wage, lump sum or any other payment for the work they do. For FBT purposes, the definition also includes:

  • most shareholder-employees
  • associated persons (such as the employee’s husband, wife, child or business partners)
  • previous employees
  • future employees
  • contractors receiving schedular payments
  • people receiving director's fees.

The following people aren't employees for FBT purposes:

  • Partners receiving a salary from their partnership.
  • Shareholders only formally occupying a role as non-executive directors or company secretaries.

You only need to pay FBT on fringe benefits provided to employees.

Taxable value

Taxable value is the actual cost of the fringe benefit. The way you work out the taxable value depends on the type of benefit and who you provide it to. For example, the way you work out the taxable value of a motor vehicle is different from the way you work out the taxable value of a low interest loan. You need to know the taxable value in order to calculate FBT.

Attributed and non-attributed benefits

Attributed benefits are fringe benefits assigned to an individual employee, that only they use or enjoy. For example, Maru’s monthly bus pass.

Non-attributed benefits are pooled or shared fringe benefits that are not assigned to an individual employee. This option is useful when all employees have the same or similar rights to a particular benefit. For example, a work motor vehicle that everyone can use.

Some non-attributed benefits need to be attributed when you calculate FBT.

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