Tag Archives: FBT Rates

Articles about New Zealand FBT rates. Including FBT rates by tax year for attribution, pooling and quarterly returns and changes of rates as tax laws are updated.

Taxlab FBT Software

The New Zealand FBT Rates Are Rising

New Zealand Government’s introduction of the new 39% top personal income tax rate has a significant consequence on Fringe Benefit Taxes (FBT). Changes to the tax rates for fringe benefits provided from 1 April 2021, include:

  • The single rate of FBT increasing from 49.25% to 63.93%; and
  • The alternate rate paid during quarters 1, 2 and 3 increasing from 43% to 49.25%.

PwC and Taxlab: 2021 FBT Update – Online Webinar

Taxlab are pleased to have Josie Goddard of PwC to talk us through the technical FBT changes and help you understand the different options for calculating FBT payable. Josie will use a case study to show the impact of the higher 64% FBT rate.

To close, we will showcase how FBT software provide a real opportunity for employers and advisers to save tax, better manage cashflow and efficiently complete the FBT return with automated de minimis, attribution and pooling optimisation as well as sense checks, reports and analytics.

Register to join our live online webinar on Tuesday 23 February 2021, 10am to 11am.

If you cannot join our live webinar, do not worry! Register and we will follow up with a link to the recording.


Speakers

Josie Goddard, PwC Auckland

Josie is a Senior Manager in PwC’s employment tax practice and brings 8 years of experience in advising large employers. She has led many payroll reviews focusing on employment taxes and has managed a number of Inland Revenue reviews and audits. Josie leads PwC’s policy submissions in relation to employment tax and was PwC’s lead specialist in relation to the recent payday reporting changes.

Jeremy Dobbie, Taxlab

Jeremy has over 10 years of experience working at PwC NZ, Thomson Reuters and EY UK, and exclusively with tax & accounting technology since 2013. He joined Taxlab in 2019 to help ensure the compliance needs of accountants and tax professionals are understood and connected with the relevant solution.

FBT Rates

FBT rates are a major risk area for Excel FBT calculators

It is always worth checking FBT rates in your excel spreadsheets as the rates do change over time and there were significant changes in the 2011 and 2012 FBT years. FBT rates 2012 (for the year ended 31 March 2012) are different to FBT rates 2011. FBT rates 2011 were blended because it was a transitional year (due to the 1 October 2012 changes to income tax rates). Its now business as usual with FBT rates 2012 based on actual marginal income tax rates rather than blended ones.

Quarterly FBT rates

These are the FBT rates you apply each quarter depending on which FBT method you are electing to use. If you are attributing fringe benefits to employees in Quarter 4 to lower your overall FBT rate, you have the option of paying at 43% or 49.25% in the first three quarters as an estimation of your final effective FBT rate under attribution. If you pay any of the first three quarters at 43% then you must attribute benefits in Quarter 4. If you pay all of the first three quarters at 49.25% then you can forgo the attribution calculation in Quarter 4 and simply pay the whole year at 49.25% (which can be very expensive).

2015 quarterly FBT rates

Quarter Single rate option Alternate rate option
Quarter 1 49.25% 43% or 49.25%
Quarter 2 49.25% 43% or 49.25%
Quarter 3 49.25% 43% or 49.25%
Quarter 4 49.25% Attribution

2014 quarterly FBT rates

Quarter Single rate option Alternate rate option
Quarter 1 49.25% 43% or 49.25%
Quarter 2 49.25% 43% or 49.25%
Quarter 3 49.25% 43% or 49.25%
Quarter 4 49.25% Attribution

2013 quarterly FBT rates

Quarter Single rate option Alternate rate option
Quarter 1 49.25% 43% or 49.25%
Quarter 2 49.25% 43% or 49.25%
Quarter 3 49.25% 43% or 49.25%
Quarter 4 49.25% Attribution

2012 quarterly FBT rates

QUARTER Single rate option Alternate rate option
Quarter 1 49.25% 43% or 49.25%
Quarter 2 49.25% 43% or 49.25%
Quarter 3 49.25% 43% or 49.25%
Quarter 4 49.25% Attribution

2011 quarterly FBT rates

QUARTER Single rate option Alternate rate option
Quarter 1 61% 49% or 61%
Quarter 2 61% 49% or 61%
Quarter 3* 49.25% 43% or 49.00%
Quarter 4 49.25% Attribution
*Note that there is a difference of 0.25% between the single rate and highest alternate rate.

2010 quarterly FBT rates

QUARTER Single rate option Alternate rate option
Quarter 1 61% 49% or 61%
Quarter 2 61% 49% or 61%
Quarter 3 61% 49% or 61%
Quarter 4 61% Alternate rate

Marginal income tax on cash pay rates

FBT rates for the tax on cash pay calculation when attributing fringe benefits to an employee under the alternate rate option in quarter four are as follows. These are the same marginal tax rates that are used for income tax purposes.

2015 tax on cash pay rates

2015 Cash pay band 2015 marginal income tax rates
$0 to $14,000 10.50%
$14,001 to $48,000 17.50%
$48,001 to $70,000 30.00%
$70,001 and above 33.00%

2014 tax on cash pay rates

2014 CASH PAY BAND 2014 marginal income tax rates
$0 to $14,000 10.50%
$14,001 to $48,000 17.50%
$48,001 to $70,000 30.00%
$70,001 and above 33.00%

2013 tax on cash pay rates

2013 CASH PAY BAND 2013 marginal income tax rates
$0 to $14,000 10.50%
$14,001 to $48,000 17.50%
$48,001 to $70,000 30.00%
$70,001 and above 33.00%

2012 tax on cash pay rates

2012 CASH PAY BAND 2012 marginal income tax rates
$0 to $14,000 10.50%
$14,001 to $48,000 17.50%
$48,001 to $70,000 30.00%
$70,001 and above 33.00%

 2011 tax on cash pay rates

2011 CASH PAY BAND 2011 Marginal income tax rates
$0 to $14,000 11.50%
$14,001 to $48,000 19.25%
$48,001 to $70,000 31.50%
$70,001 and above 35.50%

 2010 tax on cash pay rates

2010 CASH PAY BAND 2010 Marginal income tax rates
$0 to $14,000 12.50%
$14,001 to $48,000 21.00%
$48,001 to $70,000 33.00%
$70,001 and above 38.00%

Marginal income tax on all-inclusive pay rates

FBT rates for the tax on all-inclusive pay calculation when attributing fringe benefits to an employee under the alternate rate option in quarter four are as follows. These rates are the marginal income tax rates grossed up as the value of fringe benefits is always net of tax (rather than cash payments which are a gross value). The FBT rates are not an exact gross-up as rounding has been applied in the legislation.

2015 tax on all-inclusive pay rates

All inclusive pay banding 2014 marginal FBT rates
$0 to $12,530 11.73%
$12,531 to $40,580 21.21%
$40,581 to $55,980 42.86%
$55,981 and above 49.25%

2014 tax on all-inclusive pay rates

All inclusive pay banding 2014 marginal FBT rates
$0 to $12,530 11.73%
$12,531 to $40,580 21.21%
$40,581 to $55,980 42.86%
$55,981 and above 49.25%

2013 Tax on all-inclusive pay rates

All inclusive pay banding 2013 marginal FBT rates
$0 to $12,530 11.73%
$12,531 to $40,580 21.21%
$40,581 to $55,980 42.86%
$55,981 and above 49.25%

2012 Tax on all-inclusive pay rates

All inclusive pay banding 2012 marginal FBT rates
$0 to $12,530 11.73%
$12,531 to $40,580 21.21%
$40,581 to $55,980 42.86%
$55,981 and above 49.25%

2011 Tax on all-inclusive pay rates

All inclusive pay 2011 Marginal FBT rates
$0 to $12,390 12.99%
$12,391 to $39,845 23.84%
$39,846 to $54,915 45.99%
$54,916 and above 55.04%

Note that FBT rates and banding thresholds have changed.

2010 Tax on all-inclusive pay rates

All-inclusive pay 2010 Tax on all-inclusive pay rates
$0 to $12,250 14.29%
$12,251 to $39,110 26.58%
$39,111 to $53,850 49.25%
$53,851 and above 61.29%

FBT pooling rates

FBT rates for pooled benefits are applied as follows. You always have the option of paying FBT at the highest rate on a benefit if you choose to do so but using the legislated employee pool rate for benefits that can be pooled can result in significant FBT savings.

2015 FBT pooling rates

Pool 2014 FBT POOLING RATES
Shareholders 49.25%
Employees 42.86%

2014 FBT pooling rates

Pool 2014 FBT POOLING RATES
Shareholders 49.25%
Employees 42.86%

2013 FBT pooling rates

Pool 2013 FBT POOLING RATES
Shareholders 49.25%
Employees 42.86%

2012 FBT pooling rates

Pool 2012 FBT POOLING RATES
Shareholders 49.25%
Employees 42.86%

2011 FBT pooling rates

Pool 2011 FBT pooling rates
Shareholder 55.04%
Employee 45.99%

2010 FBT pooling rates

Pool 2010 FBT POOLING RATES
Shareholder 61%
Employee 49%

Why your organisation should consider using FBT Software

We strongly recommend you consider our purpose built FBT Software to reduce risk and turnaround times. For 2012 FBT you will once again have to change your FBT calculations. The rate changes from 2010 to 2012 will have destroyed many excel FBT calculators. We strongly recommend you consider our purpose built FBT Software to reduce risk and turnaround times. Please contact us today.FBT rate changes effect the FBT year ended 31 March 2011. Due to the mid year lowering of individual income tax rates (1 October 2010), the 2011 marginal income tax and FBT rates are blended.

The 2010 budget implemented tax rate changes to income tax, GST and FBT rates. It also increased the complexity of FBT calculations and will have destroyed many excel FBT calculators. We strongly recommend you consider our purpose built FBT Software to reduce risk and turnaround times.

How the 2010 Budget impacts FBT rates

Massive impact, lots of risk areas

FBT rates and calculations are heavily impacted by the 2010 budget. GST and personal income tax rate changes from 1 October (part way through the tax year) make the changes very complicated. The 2010 budget changes will first be noticed in Quarter 3 of the 2011 tax year with the real impact hitting in quarter 4.

The good news is you have some time to get to grips with the changes and update any excel FBT calculators that you rely on, or start using professionally maintained FBT Software.

No changes when filing 2011 Quarter 1-2

Business as usual. FBT is still payable under the single rate option at 61% or under the alternate rate option at either 61% or 49%. GST was at 12.5% for the whole quarter so no impact yet.

Everything changes in 2011 Quarter 3

New FBT rates apply. The single rate option is now 49.25% and the alternate rate option at either 49% or 43%. Interestingly, the single rate option is now 0.25% higher than the high alternate rate (previously both were 61%). This means that if you pay at 49% rather than 49.25% you are electing to use the alternate rate (which is irreversible within a year) and must attribute in quarter 4.

The taxable value of fringe benefits remains GST inclusive based on the GST paid when the employer procured the benefit. For motor vehicles the GST inclusive amount is based on the GST paid when the vehicle was originally purchased (by the employer or lessor). However, the deemed GST output tax (paid as FBT on the FBT return) is based on the GST rate at the time the benefit was provided. This could cause GST leakage.

For example, a gift certificate was purchased in September 2010 for $1,125.00 inc GST. It was provided to an employee in December 2010. The value of the supply is $1,150. The employer must pay $150 in its FBT return but only claimed $125 in its September GST return so is $25 worse off.

Unique Blended rates in 2011 Quarter 4

FBT is payable at 49.25% under the single rate option. FBT is payable using the attribution rules under the alternate rate. Attribution calculations use the 2011 individual income tax rates, which are blended rates due to the mid year 1 October change. There are also blended FBT rates for attribution adding to the complexity.

Why you should consider using FBT Software

TaxLab updated and fully tested all 2011 FBT calculations in June. If you aren’t using TaxLab, you should sign up now because the changes are time consuming and complicated. We have highlighted some of the changes below. Please contact us now to find out more about the benefits of FBT software.