Employers pay a fringe benefit tax (FBT) on non-cash benefits enjoyed or received by employees, shareholders, or other people associated with the business. Benefits include things like work vehicles available for personal use, subsidies such as health insurance or gym memberships, and discounts on goods or services. It doesn’t apply to income already taxed such as salary, wages, and bonuses.
When and how do I register for FBT?
An employer needs to register for FBT with the Inland Revenue Department (IRD) when you first start giving the fringe benefit to employees, shareholders, or other people associated with your business.
How does FBT affect my fleet?
Motor vehicles available for personal use are classified as a fringe benefit in some situations. You pay FBT on the cost of the benefit to the employee eg. the cost of the car for the portion of time it's available for personal use.
Businesses giving fringe benefits will need to file a return either quarterly, annually in line with the tax year, or annually in line with your income year. You will need to choose appropriate rates for the benefit and use it to calculate the amount to pay on each benefit.
Are there exemptions that may affect my fleet?
Yes, some work-related vehicles are exempt from FBT if they meet a number of conditions set out by the IRD. There are also exemptions around certain situations in which the vehicle is used, such as for emergency call outs or business trips. The IRD recommends that businesses regularly check to ensure any restrictions on employees’ motor vehicle use are being followed, as changes in use can affect tax.
How do I work out the taxable value of a motor vehicle?
The IRD has a number of calculators and tools available on its website. Speak with your accountant to understand how FBT may affect your fleet.
How does GPS tracking help to manage FBT on motor vehicles?
Fleet details in one place
Director software allows you to input details such as cost of vehicle for every vehicle in your fleet, and set up alerts based on dates, so you can manage all aspects of compliance. With Director, you can mark (make a note on) the motor vehicles that need to pay Fringe Benefit Tax to help you manage the obligations across the fleet.
Insight into vehicle use
GPS tracking provides a simple and accurate way of logging and checking vehicle use across a fleet. This is useful for businesses that need to factor in exemptions for their vehicle use such as for days when the vehicle is used for emergency call outs, business travel or during vehicle maintenance. GPS tracking data is also useful for checking that employees are sticking to their contractual obligations for using the vehicle, as this can affect tax relating to that vehicle.