Unclassified fringe benefits are all benefits provided by employers that are not specified in legislation.
For example:
- employment-related gifts or prizes
- free, subsidised or discounted goods
- some public transport benefits
- some employer-provided transport, such as e-bikes.
When you need to pay FBT on unclassified benefits
As an employer, there are 5 situations where you will need to pay fringe benefit tax (FBT) on unclassified benefits. These are when:
- you provide unclassified benefits to your employees
- unclassified benefits are provided by your associated persons, to your employees
- unclassified benefits are provided by you to associated persons of the employee
- unclassified benefits are provided by other companies within your group of companies, to your employee
- unclassified benefits are provided by a third party through an agreement between you and the third party to provide benefits to your employees.
When unclassified benefits are exempt from FBT
The unclassified benefits you provide to employees will be exempt from FBT if they are under the minimum value threshold or are for certain types of transport.
Minimum value thresholds
The thresholds for quarterly filers are:
- $300 or less for each employee in a quarter, and
- the total unclassified benefits provided to all employees in the last 4 quarters (including the current quarter) are $22,500 or less.
The thresholds for annual and income year filers are:
- $1,200 or less for each employee for the year, and
- the total unclassified benefits provided to all employees in the last income year must not exceed $22,500.
Public transport benefits
From 1 April 2023 certain public transport benefits you provide to your employees may be exempt. They need to be provided mainly for the purpose of the employee travelling between work and home and be one of the exempt transport options.
The exemption covers a fare for the following transport options:
- bus
- train
- ferry
- cable car.
Transport fares provided mainly for the purpose of the employee travelling between work and home and partly funded by the Total Mobility Scheme are also included.
The exemption does not cover transport options such as air transport, taxis and shuttles.
For more information on employer-provided public transport benefits, see the Tax Information Bulletin on the Tax Technical website.
Tax Information Bulletin, Vol 35 No 6 (July 2023): page 77
Employer provided transport
Also covered under the exemption are employer provided:
- bicycles
- electric bicycles
- scooters
- electric scooters
- other low-powered vehicles Waka Kotahi declares are mobility devices or not motor vehicles.
The exemption also applies if the employer helps pay for certain vehicle share services for any of these modes of transport.
For more information on employer-provided transport, see the Tax Information Bulletin on the Tax Technical website.
Tax Information Bulletin, Vol 35 No 6 (July 2023): page 80