Author Archives: Allen Knight

2022 Fringe Benefit Tax (FBT) Rates

2022 FBT Rates are Skyrocketing

New FBT Rates

The FBT rate changes came into effect on 1 April 2021: 

  • The single rate has moved from 49.25% to 63.93%; 
  • The alternate rate has increased from 43% to 49.25%; 
  • The pooling rate moved from 42.86% to 49.25%. 

The Impact Is a 30% Increase in FBT

Inland Revenue has advised that around 90% of taxpayers currently use the single rate to calculate their FBT. If those same taxpayers continue to use the single rate for 2021/2022 tax year, they will see a significant 30% increase in their FBT liability.

How to Minimise the Increase

Employers can perform an FBT attribution calculation in the final FBT quarter (1 January to 31 March each year). This means benefits provided over the course of the year are taxed at each employee’s marginal tax rates per their income level.

It will be more important for taxpayers to use attribution for the 2021-22 FBT year in order to keep FBT cost increases to a minimum. This is especially the case where there are a large number of employees earning under the top tax rate threshold of $180,000 p.a.

Example:

Please check out the table below for a simple illustration of how the tax liability differs between single rate and attribution in 2021 and in 2022.

EmployeeBenefitPayBenefit
Value
2021
Single Rate
2022
Single Rate
2022
Attribution
JohnMotor vehicle$150,000$8,000$3,940$5,114$3,940
JaneInsurance$100,000$3,000$1,478$1,918$1,478
JimmyGift$60,000$400$197$256$171
Totals$5,615$7,288$5,589

When Should I Start Looking Into This?

Now. In order to be able to perform your attribution calculation in the final quarter of 2021/2022, you need to ensure you have the right data available. This includes knowing which employees have received which benefits and the corresponding value. Further, there are significant cash flow benefits in having the confidence to lock in the alternate rate for the first 3 quarters of the FBT year.

How to Simplify the FBT Attribution Calculation

Contact us! FBT calculation software like Taxlab is available to make FBT compliance much easier and more robust while helping you save tax costs. We would be happy to organise a demo for you. Otherwise, you can also get in touch with your tax adviser to evaluate your options based on your requirements and resources.

FBT Resources

Online

Webinars

FBT Trainings 2020

To help during lockdown, this year we are offering free online FBT software training. We also highlight some excellent FBT technical sessions hosted by our partners.

Free Taxlab FBT software training

If you are new to Taxlab, or would like a refresher, please register today for a free online training:

Each session is 1 hour long, qualifies for CPD hours and covers the fundamentals of Taxlab FBT, including:

  • Importing benefits
  • Managing motor vehicles
  • Importing employee salary data
  • Full attribution calculation and Q4 true-up
  • Finalising and filing FBT returns

FBT technical training

Want to brush up on your FBT technical knowledge or understand the latest employee tax developments in a Covid-19 world?

Our partners are offering some useful FBT technical sessions over the next month:

Taxlab Covid-19 Update

Last updated 3 August 2020

Taxlab service availability: Business as Usual

We activated our Business Continuity Plan as a precautionary measure on 16 March 2020 and tested closure of our Auckland office and London working hub. We have not experienced any issues in service uptime or support availability to date. To help you understand and gain assurance of our business continuity, please see further information below:

  • We provide software-as-a-service and continue our product development and delivery of service through the use of cloud applications. 
  • We have confirmed with external service providers to ensure they too, can continue to deliver to us.
  • We have full-time remote workers, and as such we are highly practised using remote collaboration and communication tools to ensure business as usual.
  • We do not expect any technology bottlenecks should we need all our staff to work remotely.
  • Our team will continue to be contactable via our Support Helpdesk, either via phone (0800 00 1035) or email (support@taxlab.online) and we continue to be committed to delivering high quality customer service. 
  • We thank you in advance for your understanding and patience and note that we will endeavour to respond to queries as soon as possible.

We do not anticipate any significant changes to our business continuity plan or COVID-19 policies but as we navigate this dynamic landscape, any updates are likely to be made on this webpage.

Safety of our people

We have implemented COVID-19 policies across our staff in NZ, Australia and UK. This includes:

  • Halting travel (domestic or international)
  • Declining face to face business meetings or events in favor of virtual meetings where possible
  • Reinforcing good hygiene habits
  • Our Auckland office and London working hub are open to staff and office support services under Government guidelines for safe working, but is not open to clients or suppliers without executive approval.
  • Encouraging all staff to take appropriate precautions in line with government recommendations as we continue to put the safety of each other first.

While we serve the needs of our customers, we will continue to work both at our offices and remotely at home in line with government mandates and advice.

Take care

Our team remains committed to your success. We are well placed to continue business as usual and maintain the software service and support you expect from us.

We wish you, your family and your colleagues, good health and diligent hygiene as we look to overcome uncertain times.

How to correctly disclose tax pooling transactions in your IR4J Imputation Return

We are often asked why we default tax pooling transactions to the Other disclosure boxes on the IR4J imputation return. The answer is simple, this is where Inland Revenue specify you put them. We have directly confirmed this with them:

“Deposits and transfers into a tax pooling account that create an imputation account credit should be recorded in keypoint 41E, while refunds and transfers out of a tax pooling account that create an imputation account debit should be recorded in keypoint 42D.”

Inland Revenue, 21 August 2015

Why do Inland Revenue want it this way rather than including pooling in the tax payments disclosure box… who knows. We suspect they would prefer to have a separate box for tax pooling on the IR4J but this isn’t an option in the current system.

Taxlab Australia

Taxlab to enter Australian market

Industry heavyweight Mike Roberts named to lead Taxlab Australia

MELBOURNE, Australia – Leading provider, Taxlab, announced today its planned entry into the Australian market, which will bring its revolutionary tax compliance software to Australian customers for the first time.

The New Zealand-based company will enter the Australian tax compliance software market in 2019 under the leadership of Mike Roberts, a 20-year veteran of the global tax technology market.

Roberts spent five years at Thomson Reuters leading the company’s European, Middle East and Africa (EMEA) tax and accounting business. Most recently, he led EY’s Oceania Tax Technology advisory team providing direct experience of the trans-Tasman market.

Mike Roberts“I’m hugely excited to be joining Taxlab at this major milestone in the business’s life. The market is demanding high quality, proven cloud-based tax reporting products and I’m very much looking forward to delivering on those needs with Taxlab’s revolutionary platform.” – Mike Roberts, Taxlab Australia

Taxlab is unique in its ability to provide a single, cloud-based approach to collate, process and complete tax compliance for every taxpayer, regardless of their entity type, size or complexity. This is a true differentiator for tax compliance software, and comes at a time when the Australian market is seeking to modernise its tax compliance systems.

Allen Knight“Welcoming Mike into Taxlab is an exciting time for us as we bring our unique tax solutions to the Australian market. With an outstanding track record of building and leading international tax technology businesses, Mike further strengthens our executive leadership capability.” – Allen Knight, Taxlab Managing Director.

Taxlab is New Zealand’s leading solution for tax compliance and reporting. Founded in 2009 by Allen Knight and Karl Farrand, who previously led Deloitte’s in-house tax technology team, Taxlab’s current client base includes more than 150 of New Zealand’s largest corporates and firms, including three of the “big four” accounting firms.

For more information or to arrange media interviews, please contact Mike Roberts at mike@taxlab.online or on +61 499 000 264.