New FBT rates
Inland Revenue has updated its FBT calculators to reflect the 2011 fringe benefit tax (FBT) rates. These changes are due to updates in income tax and GST rates that took effect on 1 October 2010.
At TaxLab, we rigorously test our FBT software against Inland Revenue’s calculators as part of our quality control process to ensure accuracy and compliance.
Key changes to Inland Revenue’s 2011 FBT calculator
1. Blended tax and FBT attribution rates
Due to the 1 October 2010 tax changes, blended rates now apply to both personal income tax and FBT attribution calculations for the 2011 FBT year.
2. Changes to Q3 and Q4 optional rates
Quarterly FBT rates have been adjusted to accommodate the transition in income tax rates.
3. GST Rate Change and Impact on Fringe Benefits
- The GST rate increased from 12.5% to 15% on 1 October 2010.
- This affects the valuation of fringe benefits, particularly for benefits acquired at 12.5% but provided to employees after the GST rate change.
- In some cases, this shift leads to GST leakage, where employers must account for benefits as if supplied at the new 15% rate.
FBT calculator updates by Inland Revenue
Fringe Benefit Tax alternate rate calculator (Inland Revenue)
We tested this calculator and found no issues. Notably, the rounding logic now aligns with the multi-employee calculator, fixing previous discrepancies. Additionally, FBT pooling rates are now displayed on the landing page, serving as a helpful reference.
Fringe Benefit Tax alternate rate calculation sheet (Inland Revenue)
Testing confirmed that this calculator is working correctly. Inland Revenue has also included FBT rates for Quarters 1 to 3 on the landing page, providing another useful reference.
Other Important FBT Updates
A previous issue in e-FBT that displayed incorrect FBT rates has now been resolved. The system is no longer showing the non-existent 59% FBT rate, which was scrapped due to a change in government policy.
When to use FBT Software instead of Inland Revenue’s FBT calculator
Inland Revenue’s FBT calculators work well for micor businesses. However, if your business:
- Provides fringe benefits to more than 10 employees
- Wants to benefits from lower FBT by calculating FBT attribution
- Deals with motor vehicle FBT calculations
… then FBT software is the better choice.
Please contact us to find out more.