There have been some recent changes to fringe benefit tax. But what exactly is fringe benefit tax (FBT) and how does this tax affect you as an employer?
What is fringe benefit tax?
A fringe benefit is a non-cash benefit that you, or a third party, provide to one of your employees. This could include benefits like offering employees a car, health insurance, gym membership, gift cards and staff discounts, etc.
In situations where you provide fringe benefits to your employees, you may need to pay fringe benefit tax (FBT) on these benefits.
How does FBT work?
As an employer, you’ll pay FBT on the cost of the benefit that you’re supplying to one of your employees. So, if you provide health insurance, for example, you’ll pay FBT based on the overall cost of providing this insurance to your team member.
There are four main groups of taxable fringe benefits:
- Motor vehicles available for personal use
- Free, subsidised or discounted goods and services
- Low-interest loans (other than those provided by life insurance companies)
- Employer contributions to sickness, accident or death benefit funds, specified insurance policies, and superannuation schemes not subject to employer superannuation contribution tax (ESCT).
You must register for FBT with the Inland Revenue as soon as you start providing the benefit (or benefits) to your employer.
What are the recent changes to FBT?
From April 2026, changes to FBT have been introduced that may affect how employers, like yourself, treat certain benefits.
In some cases, you now have more flexibility to choose whether to apply FBT or to treat a benefit as employment income with PAYE deducted.
It’s worth reviewing how you currently treat the affected employee benefits to make sure you’re complying with the new rules.
Benefits where the rules have changed include:
- Gift cards
- Equalisation of FBT and PAYE
- Health and safety equipment
- Investment Boost and motor vehicles
Helping you comply with the FBT rules
If you’re unsure whether your employee benefits are being treated correctly for tax purposes, we’re here to help. We can review your current employee benefits and assess how recent changes to FBT legislation and compliance requirements may affect you.
Contact us — we’re here to help.
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