Fringe Benefit Tax (FBT)

Fringe Benefit Tax (FBT) is a tax paid by employers on non-cash benefits they provide to employees, such as company vehicles for private use, low-interest loans, employer-paid health insurance, free or discounted goods, and employer contributions to non-KiwiSaver superannuation schemes.

FBT is the employer's liability, not the employee's — employees don't pay tax on fringe benefits they receive. However, FBT can indirectly affect what benefits employers choose to offer, since the tax cost makes some benefits more expensive than simply paying higher wages.

Employers can calculate FBT using the single rate (63.93%), the short-form alternate rate, or the full alternate rate (which attributes benefits to individual employees based on their marginal rates). The alternate rate methods can significantly reduce the FBT cost for employers with many lower-paid staff.