FBT is a tax employers pay on non-cash benefits they give to employees - things like company cars, low-interest loans, and free or discounted goods and services. It exists so that non-cash perks get taxed fairly, the same as salary. Employees don't pay FBT. The employer does.
FBT is a tax employers pay on non-cash benefits they give to employees - things like company cars, low-interest loans, and free or discounted goods and services. It exists so that non-cash perks get taxed fairly, the same as salary. Employees don't pay FBT. The employer does.
| Rate | When it applies |
|---|---|
| Single rate 63.93% | Applied to all benefits for all employees. Simplest method. No further calculations needed if used all 4 quarters. |
| Alternate rate 49.25% | Can be used in quarters 1 to 3 for employees whose total income and benefits is under $180,000. Usually results in lower FBT than the single rate for those employees. |
| Pooled alternate rate | Non-attributed benefits pooled at 49.25% for most employees, 63.93% for major shareholder-employees. |
All rates confirmed from IRD IR409 April 2026.
| How often | Who can use it | Due dates |
|---|---|---|
| Quarterly | All employers. No election needed. | Q1 due 20 July, Q2 due 20 October, Q3 due 20 January, Q4 due 31 May. |
| Annual | Employers whose PAYE and ESCT deductions were $1 million or less in the previous year. Election required by 30 June. | Due 31 May. |
| Income year | Close companies providing benefits only to shareholder-employees, meeting the same $1 million threshold. | Same due date as company income tax return. |
FBT applies whenever a vehicle is available for private use - even if the employee doesn't actually use it. The taxable value is calculated quarterly as 5% of the vehicle's cost price (GST-inclusive), or 9% of tax book value per quarter. On an annual basis that's 20% of cost price or 36% of tax book value.
Example: A company car with a cost price of $50,000 (GST-inclusive). Quarterly taxable value using cost price method: $50,000 x 5% = $2,500. FBT at single rate 63.93%: $2,500 x 63.93% = $1,598.25 per quarter.
Work-related vehicles may be exempt if they are mainly used to carry goods, have permanent business signage, and employees have written notice they cannot use the vehicle privately.
From 1 April 2026 new valuation rates apply to vehicles where Investment Boost has been claimed. Tax book value rate becomes 10.35% per quarter (GST-inclusive) instead of 9%.
FBT applies to the difference between the prescribed interest rate and the actual rate charged on a loan. The prescribed rate from 1 January 2026 is 5.77% per annum. Rates are reviewed quarterly by IRD.
Example: An employer lends $20,000 to an employee at 0% interest. Prescribed rate is 5.77%. Annual FBT taxable value: $20,000 x 5.77% = $1,154. FBT at single rate: $1,154 x 63.93% = $737.76.
These are free or subsidised goods and services - gift baskets, staff discounts, memberships, and similar perks. FBT applies when the total taxable value for an employee exceeds $300 per quarter or $1,200 per year. If total benefits across all employees exceed $22,500 per year, FBT applies to the full amount. From 16 April 2025, gift cards can be treated under FBT rules or PAYE rules.
From 1 April 2026 employers can choose to treat reimbursements of personal expenses as PAYE income instead of FBT unclassified benefits. New valuation rates apply to vehicles where Investment Boost has been claimed. From 1 April 2026 employers with specified insurance premiums where all employees have the same entitlement can pool the benefit instead of attributing it individually. All confirmed from IRD IR409 April 2026.
No. Sole traders and partnerships do not pay FBT on business vehicles they use privately. Instead they make income tax and GST adjustments for the private use portion.
Use the single rate of 63.93% on all benefits for all employees across all four quarters. No further calculations are required at year end.
Quarterly filers pay by 20 July, 20 October, 20 January, and 31 May. Annual filers pay by 31 May. Income year filers pay by the same date as their income tax return.
Close companies with only one or two vehicles available for private use to shareholder-employees can elect to opt out of FBT on those vehicles and use income tax rules instead.
File in myIR at ird.govt.nz. Register under I want to - Register for new accounts. You can also register at the same time as employer registration using form IR334.
Check the official IRD guidance for the latest published rules, thresholds, timing, and definitions that apply to FBT.
This calculator provides estimates only and does not replace official IRD calculations.