Thursday, 28 February 2013

Fringe Benefit Tax (FBT)

This is a tax paid by the employer on certain benefits given to an employee.The most common one of these is a motor vehicle. There is however exemptions from paying FBT on vehicles in these 4 circumstances:

  1. The vehicle is a work-related vehicle and it is not available for general private use and the following apply (Full exemption):

    • Employees or shareholders store the vehicle at home and
       
    • It may not be used for general private purposes and
       
    • It is a work related vehicle which means the following

      1. principal design of the vehicle cannot be for carrying of passengers,
           
      2. the exterior of the vehicle must permanently and prominently display the name of the employer or the business logo,
         
      3. the employer must inform the employee in writing that the only personal use of the vehicle is travel between work and home or travel incidental to business travel (for example, passing by the bank on the way home from work).
           
      The employer must conduct a check,at least quarterly, that the above is adhered to.

       
  2. Work-related vehicles with limited private use (partial exemption)
    • You will qualify for a partial exemption if the above conditions apply, but the vehicle is available for private use on certain days.
       
    • The employer must however specify which days and cannot only say "any two days of the week"
       
  3. Vehicles stored on the employer's premises (Full exemption)
    • The vehicle is stored on the business premises or
       
    • at a company shareholder's home that is also the company's premises and ;there is no private use of the vehicle.
  4. Vehicles over 3500kg. (Full exemption)
More information on FTB at the IRD website

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