Have you ever wondered, do I need to pay FBT tax?

Ever found yourself asking what is FBT?

FBT, or Fringe Benefit Tax, is a tax that applies to non-cash benefits provided by employers to their employees in New Zealand. This tax applies to those sweet little perks you offer your team, like company cars, free accommodation, or discounted gym memberships.

The FBT is calculated on the value of the non-cash benefits you provide to your employees.

Now, here's where it gets a bit technical. Some benefits are exempt from FBT, like work-related clothing, health insurance, and certain transportation benefits. If you're providing your team with uniforms or covering their health insurance, you can breathe a sigh of relief – no FBT to worry about there.

At the end of the day, the FBT is all about keeping the tax system fair and ensuring everyone pays their fair share, even when it comes to those little perks. So, while it might seem like a bit of a nuisance, it's just part of the grand scheme of things.

And remember, if you're planning on treating your team to a free trip to Fiji, you might want to check if the FBT applies first. 

What about FBT tax on Entertainment? 

Well if you're treating your team to one of those fancy gift baskets filled with gourmet treats and a nice bottle of wine as a holiday bonus, you'll need to factor in that FBT if it is more than $300 per employee per quarter.

Now, if the entertainment is completely business-related, like meals while your staff are travelling for work or food at a conference, you're in the clear – no FBT to worry about there. It's a fully deductible expense without any FBT.

But here's where it gets a bit tricky. If the entertainment has a significant private element, like a corporate box at a sports event or hiring a fancy boat for a staff shindig, you'll only be able to deduct 50% of the cost for tax purposes. And no FBT applies either, because it's not considered a straight-up employee benefit.

At the end of the day, it's all about keeping good records and being upfront with your accountant. If you're providing entertainment that clearly benefits your employees, be prepared to pay the FBT. But if it's purely business-related, you can claim the full deduction without any FBT worries.

Just remember, if you're ever unsure, it's always better to err on the side of caution. 

If you need to clarify things a little more, give your accountant a call today! They are here to help.