๐ช๐ฎ๐๐ ๐๐ผ๐ ๐ฐ๐ฎ๐ป ๐ฟ๐ฒ๐๐ฎ๐ฟ๐ฑ ๐ฒ๐บ๐ฝ๐น๐ผ๐๐ฒ๐ฒ๐ ๐ฎ๐ป๐ฑ ๐๐ต๐ฎ๐ฟ๐ฒ๐ต๐ผ๐น๐ฑ๐ฒ๐ฟ ๐ฒ๐บ๐ฝ๐น๐ผ๐๐ฒ๐ฒ๐ ๐๐ถ๐๐ต๐ผ๐๐ ๐ต๐ฎ๐๐ถ๐ป๐ด ๐๐ผ ๐ฝ๐ฎ๐ ๐๐ฟ๐ถ๐ป๐ด๐ฒ ๐๐ฒ๐ป๐ฒ๐ณ๐ถ๐ ๐ง๐ฎ๐ .
Fringe Benefit Tax (FBT) came about in 1985 so the Government could tax non cash benefits provided to employees. In fact it is an Income tax based on the assumed value of the benefit and the tax is payable by the employer. Most of us would be familiar with the exposure to FBT when a company car is available to an employee for private use.
However the FBT rules do provide some exemptions where the business can claim the expense and ย is not liable to pay FBT. These exemption should be considered if you are looking to reward employees.
- Gifts, prizes, subsidised or discounted goods to individual employees less than $300 including gst per quarter are exempt as long as the all employeesย total spend in this quarter plus the three preceding quarters is less than $22,500. So in summary you could gift 18.75 employees up to $1,200 pa. Gift vouchers are good method to simplify the process as long as they are not for food or drinks as they are then only 50% deductible due the Entertainment Tax regime. Entertainment tax can be a topic for another day.
- Transport – Normally getting to and from work would be viewed as a private expense not a business expense. However you can pay for and claim as an expense employee public transport (buses, trains , ferries and cable cars) for travel to and from work. But not air flights, taxiโs or shuttles.
- Transport – You can provide and claim the cost of low-powered vehicles such as bicycles, electric bikes, scooters or electric scooters. These are exempt from FBT.
- Carparking can be provided as long as they are on your premises or you lease a carpark space off site.
- Frequent flyer rewards , where employees do a bit of business travel, the employee should join the scheme in their own capacity then they can utilise the rewards without it being seen as a benefit provided by the business.
Next week # TAXtipNZ # 8 ย Motor Vehicles in General
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